Ivan Lewis: I agree entirely with my hon. Friend. Raising educational standards and performance is, of course, related to teaching and learning, but also to good leadership. The content of the curriculum is also relevant, but so are the factors that impact on the lives of children and young people before they arrive at the school door every morning. The fact that young people have to fulfil the responsibilities of the young carer, or suffer bullying or antisocial behaviour inside or outside school, has a direct impact on our ability to raise standards and ensure that every child fulfils its potential. A core part of a school's responsibility should be to identify the problems of students and pupils. For me, young caring is a fundamental part of a school's responsibility in the modern world.

Henry Bellingham: Can the Minister explain why he and his ministerial colleagues allowed the new Norfolk PCT to start operating with a £50 million deficit? Is he aware of the widespread concern in East Anglia that a number of accident and emergency units are under threat, and can he confirm that there will not be no linkage between strategic health authority deficits and the closure of A and E units?

Jeremy Corbyn: The Minister will be aware that there has been a large increase in PCT spending in the borough of Islington in the past 10 years and that the number of doctors has doubled. In the next five years, the borough's population is likely to rise by 14,000, and there are already enormous demands on overstretched mental health services. What consideration is he giving to the needs of mental health, as funded through the PCT, in future spending rounds and the future allocation of funds for inner city areas such as mine?

David Miliband: With permission, Mr. Speaker, I should like to make a statement on the serious flooding that has affected large parts of England in the past 24 hours. As the House will know, the flooding was caused by the most exceptional weather conditions: up to 100 mm of rain in 24 hours in several places. This follows an unusually wet month with up to double the normal average monthly rainfall, which has saturated the ground and caused rivers to rise above their normal levels for the time of year.
	Sadly, I have to report the confirmed loss of three lives: a 68-year-old man and a teenage boy died in separate incidents in Sheffield, and a 28-year-old man died in Hull. I am sure that the whole House will want to join the Prime Minister in extending our very deep sympathy to the families and friends of all those who have lost their lives in these tragic incidents.
	It is estimated that some 1,000 properties have been flooded in and around Sheffield, Nottingham, Leeds, Hull, Grimsby, Rotherham, Doncaster, Cheltenham, Shropshire and elsewhere. We all know that flooding is every householder's nightmare. Within the past two hours, the Minister for Climate Change and the Environment, my hon. Friend the Member for Dudley, South (Ian Pearson), has attended the Gold Command meeting, and he is visiting some of the affected areas in south Yorkshire today. He will see for himself, and will report back to me on, the major impacts that the floods have caused. These are traumatic events, especially for the elderly people involved, and every effort will be made to support them.
	This morning, the Environment Agency had in place 25 severe flood warnings, 133 flood warnings and 129 flood watches, mainly concentrated in Yorkshire, the midlands and Lincolnshire. The situation does, of course, remain subject to regular change. River levels are dropping in the upper catchments today, although they will still rise further downstream. Flood defence operations are in place, including, where appropriate, temporary defences.
	The House will have seen reports of very real dangers associated with the Ulley reservoir near Rotherham. The emergency services are working to control the situation, utilising high volume pumps that have recently been bought for the fire and rescue Service through the good offices of my right hon. Friend the Secretary of State for Communities and Local Government. The situation is potentially serious. Gold Command is monitoring developments very carefully and contingency arrangements are being made. Two hundred and fifty people from the downstream area have been moved from their homes, and the M1 motorway has been closed as a precautionary measure.
	The founding principle of the emergency response system is for decisions to be taken locally through an integrated structure, with the police in charge once Gold Command is activated. I am sure that the House will want to pay tribute to the heroic efforts of the many who have responded so magnificently to this event at local level. These include the staff of the fire, ambulance and police and other rescue services, local authorities, the Environment Agency and the voluntary sector. We know just how hard the fire and rescue service worked in the ultimately vain attempt to rescue the man trapped in the drain in Hull, and saw on television the RAF search and rescue helicopters airlifting people at risk in Sheffield. Otherwise, there has been no requirement for armed forces support. However, armed forces liaison officers were deployed to Gold Commands yesterday afternoon, notably in Humberside and Sheffield, and are ready to provide support if required. Overall, some 1,400 people have been provided with emergency shelters and other temporary accommodation. The community spirit in all the affected areas has, from all the reports that I have received, been outstanding.
	It is clearly much too early to make a full assessment of the event. All relevant lessons will be learned once the immediate priorities have been met. However, I have been assured that the Environment Agency's new Floodline Warnings Direct system performed well in issuing warnings to very large numbers of people in areas affected.
	Some water flowed over the flood defences as the unprecedented rainfall exceeded what they were designed to deal with, but there had been no reported structural failings of flood defences. The local authorities are responsible for the short and longer-term recovery effort in the affected areas, and I am sure that elected members and officials will rise to that challenge. The relevant Government offices and other agencies will work with the local authorities to support them in that process.
	Emergency financial assistance is available to local authorities under the Bellwin scheme to help with non-insurable clear-up costs incurred in taking immediate action to safeguard life and property following a disaster or emergency in their area. Local authorities have one month from the end of an incident to notify the Department for Communities and Local Government that they intend to apply for activation of a Bellwin scheme. If approved, that Department will usually reimburse an authority for 85 per cent. of its eligible costs above a threshold related to the authority's annual budget.
	I am also pleased to note that insurers are playing their part in the recovery, and that the Association of British Insurers has advised that its members have staff in place to ensure that claims are tackled promptly.
	Ministers and officials in my Department and elsewhere in Government have kept in close touch with the events around the country without getting in the way of the local delivery effort. I spoke last night at 10.40 pm to the chief executive of Sheffield city council and this morning with the chair of the Environment Agency. It is clearly most efficient that decisions on how to manage the event are taken locally, drawing on local emergency plans. Again, those seem to have operated well.
	For many people, the immediate task is one of clean-up. However, it is also vital to prepare for any further wave of extreme weather. Heavy rain later in the week remains a real threat and all the appropriate agencies remain on high alert. I will report any further significant short-term developments to the House.

David Miliband: I assure the hon. Gentleman that his admiration for me is fully reciprocated. He has confirmed his unenviable reputation for being someone who never misses an opportunity for opportunism and I congratulate him on his consistency.
	The hon. Gentleman knows that it is simply not true that capital spending was cut last year— [ Interruption. ] My hon. Friend the Member for Carlisle (Mr. Martlew) nods because he knows that. The hon. Gentleman will also know that in respect of revenue spending the delays last year to which he referred have been more than made up in 2007-08 already, so in the context of a doubling of spending his point is pretty weak. In respect of the Environment Agency's planning assumptions, the hon. Gentleman claims a knowledge of economics so I do not what other basis he thinks the agency should be using to plan for the future. Given that we have not yet made a settlement, it seems prudent to act on that basis, just as it would be prudent for the hon. Gentleman to wait until our comprehensive spending review announcement to see how the Government will continue to do justice to the important issues of flood defence.

George Mudie: I warmly support the remarks made by my right hon. Friend the Member for Sheffield, Brightside (Mr. Blunkett) on the need for urgent action before the weekend. In the longer term, will the Secretary of State agree to review the decision of the Environment Agency to shelve the £100 million scheme that was designed to protect Leeds city centre? Will he also ask the Environment Agency to expedite the Wyke Beck scheme in my constituency, which will help alleviate flooding in an area that has been flooded three times in three years, to the great distress of hundreds of people?

Alan Simpson: I beg to move,
	That leave be given to bring in a Bill to promote sustainable energy and energy efficiency; to make further provision in respect of the regulation of the gas and electricity industries; to provide Ofgem with new environmental and social duties; to make further provision about the role of local authorities in meeting the United Kingdom's carbon reduction and fuel poverty targets; and for connected purposes.
	This debate takes place at an auspicious moment in Parliament's history. It is the end of one era and the beginning of another. What connects the two eras is the serious challenges of fuel poverty and addressing climate change that will be inherited by the new Prime Minister and the framework of governance that he will bring with him. The truth is that we sit within a policy framework that is not fit for purpose, in terms of our ability to meet the targets that we have set ourselves.
	Let me give the House some of the benchmark figures that lead me to say that. First, last week I received a reply from the Minister for Housing and Planning, confirming that there are 2.2 million households in abjectly fuel-poor properties that have a standard assessment procedure rating—an energy efficiency rating—of less than 30. Department of Trade and Industry figures confirm that if there is a steady increase in energy prices, as is predicted, by 2016—the date by which we are legally supposed to have completely eradicated fuel poverty in the UK—there will be more than 3 million fuel-poor households in our country. We also know from the papers that have been produced in support of the Climate Change Bill that on current projections we will not meet our 2020 climate change commitments.
	We need a new framework—a step-change framework—that will allow us to address those points, and I have tried to incorporate such a framework in the Bill. It seeks to address four issues. First, it would give towns and cities a duty to produce their own sustainable energy plans that would meet or exceed the national targets. Secondly, it seeks to reform the role of Ofgem. Thirdly, it would introduce the concept of citizens' allowances, for both electricity and gas, to underpin a shift in the tariff system framework. Those allowances would have to be delivered at the company's lowest tariffs, and we would then move to a system of higher charging for increased energy consumption. Finally, my Bill seeks to give the Secretary of State the power to introduce feed-in tariff systems, which would have preferential payback frameworks that would give an entitlement to the citizens who provided that feed-in energy. I shall go through those four aims one by one.
	We know that by 2016 the Government hope to provide five new eco-towns that are carbon-neutral in their built design. By that time, however, Germany will have 40 to 60 eco-cities, made up of existing properties in which people are living now. That is the challenge for the UK, too. The building of 200,000 new houses a year is important, but the test is what we are going to do with the 25 million properties in which people are living today and in which, in all probability, they will live the majority of their lives. There is therefore a big step change from 200,000 properties a year to the 25 million with which we will have to deal in 10 years. If we are to get there, we must provide a different rules base for our energy system, which is why we must change Ofgem's framework or terms of reference.
	I have spent the past four or five years going round all the major energy companies, asking them what plans they have over the next five years to sell less energy for consumption. Not a single company in the land has any plans to do so. When I ask why, they say that Ofgem requires them to enter into least price competition for the sale of energy, so they are locked into short-term contracts that are suicidal in the race towards a precipice of increased energy consumption that will accelerate the problems of climate change. That must be changed by giving Ofgem a different remit so that it has a duty, first, to promote reduced energy consumption and, secondly, to promote the development of an energy market for the sale of energy services, rather than the sale of energy consumption. It would be helpful, too, if we removed some of the constraints or confines within which energy companies are required to work.
	For energy companies themselves, part of the dilemma is the fact that they are locked into the 28-day rule. They are required by the Government to spend about £560 million a year as part of their energy efficiency contribution to alleviate fuel poverty and achieve carbon reduction targets, but they do not know how to do so within 28-day contracts. They want to get out of that lock. I suspect that citizens would say pretty much what every hon. Member would say when asked whether they would sign up to a 10-year contract with an energy supply company: "There's not a cat in hell's chance, because before the ink is dry, the company will double or treble the prices, so we would be hooked into a punitively priced contract for 10 years." We must therefore move to energy services companies that are community owned or municipally owned, just as they are in large parts of Europe. By allowing those 10-year contracts between people and energy companies we can secure long-term partnership contracts that will allow the companies to spend their e-contributions in a much more productive and sustainable way.
	The most important aspect of the Bill is the Secretary of State's powers to introduce feed-in tariffs. A couple of weeks ago, I brought Hermann Scheer to Parliament. In Germany, he is recognised as the father of feed-in tariff legislation. He is a German parliamentarian, and he was responsible for piloting a measure through the German Parliament in 2000. The German Secretary of State is empowered to set tariffs that can be put in place for 20 years and, for the same period, citizens are paid up to four times the market price for clean energy that they put back into the system. That has driven the transformation of the German energy sector, so that in the last year alone it delivered 97 million tonnes of carbon savings, which is 10 times what the UK aspires to but fails to deliver. That has delivered jobs and the lead in the incorporation of renewable technologies, and it has made a radical impact on the concentration of fuel poverty in Germany. That is the core of what I hope the Bill would deliver.
	The key features of the Bill are that it would move us into a different conceptual framework for what the next energy era will look like. The Bill is both visionary and practical. It is deliverable and economically viable. It is urgent, possibly more so than anything else in my lifetime. It creates jobs, as the Germans have done—about 240,000 jobs. It takes people out of fuel poverty and cuts carbon emissions like no other single measure has been able to do. It delivers a sense of community ownership of both the climate change agenda and the determination to eradicate fuel poverty.
	It was Victor Hugo who said that there was nothing more powerful than an idea whose time had come. I believe that the combination of the four elements in the Bill encapsulates that idea, and I hope the House will determine that its time has come too.
	 Question put and agreed to.
	Bill ordered to be brought in by Alan Simpson, Mr. David Amess, Peter Bottomley, Malcolm Bruce, Mr. Dai Davies, Dr. Ian Gibson, Mrs. Sharon Hodgson, Dr. Brian Iddon, Mrs. Linda Riordan, Sir Robert Smith, Andrew Stunell and Mr. Mike Weir.

Julia Goldsworthy: I beg to move amendment No. 38, page 3, line 15, leave out clause 4.
	I raise the matter again because the issue of inheritance tax seems to be exercising ever greater numbers of people, yet the changes announced on Budget day were passed almost without remark. On the face of it, those changes were good news, which one might expect the Chancellor to want to champion. Clause 4 raises the nil rate threshold to £350,000 from 2010-11—another example, perhaps, of the Chancellor trying to keep control of the Treasury long after he leaves it. The Red Book does not tell us what the cost will be to the Exchequer, because we have information only up to 2009-10. The increase comes after several years of successive increases in threshold, which is to be welcomed.
	I raise the issue in order to highlight the contrast between the increase in threshold and the rise in house prices. In 2005-06 inheritance tax raised £3.3 billion in revenue to the Treasury, and this year that is set to increase to £4 billion. Let us compare that to the rise in house prices. Between 1995-96 and now, house prices have increased by 199 per cent., according to the Halifax. Over a similar time scale, the inheritance tax threshold has risen by only 95 per cent. It is clear that the number of estates caught by inheritance tax will have increased over that period. In 1996, 15,000 estates paid inheritance tax. In 2006, that figure had increased to 37,000. Will the Minister acknowledge that the nature of inheritance tax and the objective that it is intended to achieve are changing?
	Inheritance tax is changing from a charge on the very wealthy to a charge on those who consider themselves to be on middle income, who have benefited from rapidly rising house prices. It recalls to mind an example that came to my attention in my surgery involving a couple who had lived in Cornwall all their life. They were living in two adjoining residences, one of which belonged to their parents. They failed to understand that they could use the allowances of both parents, but they did not realise until the point at which both parents had died. The total value involved was such that they had to move out of the property where they had lived all their married lives, and where their parents had lived all their married lives, in order to pay the inheritance tax bill. If they had used both parents' allowances, they would not have needed to do that. There are people who are being caught because they do not understand the system. They do not necessarily have very large incomes or live in particularly valuable properties.

Theresa Villiers: Like the hon. Member for Falmouth and Camborne (Julia Goldsworthy), the Opposition recognise the concern felt by many across the country about the increase in the number of people caught in the inheritance tax net since the Chancellor took up residence in No. 11 10 years ago. Under this Chancellor, inheritance tax is no longer confined to the wealthy and now impacts on those on middle incomes, too.
	The hon. Member for Falmouth and Camborne has already told us some of the figures, and I shall add a few more. The Inland Revenue figures show that the revenue raised by inheritance tax has more than doubled under Labour, rising from £1.6 billion in 1997 to £3.6 billion last year. The Treasury expects the tax take to rise again this year to £4.1 billion. The proportion of estates liable to inheritance tax has tripled from 2 per cent. in 1997 to 6 per cent. on the most recent figures, and, as we have heard, the number of estates paying inheritance tax has more than doubled from 15,000 10 years ago to 35,000 this year.
	Many people are anxious about the potential for a further increase in the number of estates affected by IHT with the growth in house prices. Halifax has carried out some extensive research on inheritance tax and has calculated that house prices have increased by 199 per cent. since 1995-96, which is far ahead of the increase in thresholds. It believes that the number of owner-occupied houses valued over the current £300,000 threshold is double what it was five years ago and now stands at £2.3 million or 12 per cent. of owner-occupied homes.
	Particular concern is felt about inheritance tax in London and the south-east because of the high property prices. The average London property price went over the IHT threshold at the end of 2006. The Halifax research tells us that one in 10 postcodes have an average property price over the current £300,000 threshold, which is double the number five years ago. Scottish Widows has also published research about the increase in the number of home owners whom it believes now face the prospect of an IHT liability on the basis of their current net worth. A Grant Thornton study has projected an increase in the number of estates paying inheritance tax to 45,000 or 50,000 by 2009, assuming that asset prices continue to grow at their long-term average rate.
	As I said in Committee, the Conservative party is not making promises on changes to the inheritance tax rates, bands or thresholds. We are not making uncosted, up-front tax cut promises on IHT or any other tax, because we fear that the public finances will have deteriorated so much by the time of the next general election that the nation will not be able to afford tax cuts. I know that that will disappoint those who want radical changes to, or the abolition of, IHT, but I hope that they recognise that economic stability is even more important than tax cuts and that a Government led by my right hon. Friend the Member for Witney (Mr. Cameron) will not risk that stability.
	Nevertheless, we are, of course, happy to examine the options for tax reform. In this area, as in any other, it is important that all parties seek to address the issues in a thoughtful and considered way. With that in mind, I have listened with care to the changes to inheritance tax proposed by the hon. Member for Falmouth and Camborne. Given the Liberal Democrats' commitment to increasing thresholds for IHT, it is bizarre to table an amendment that would delete a clause that increases those thresholds, which is what amendment No. 38 would do. Then again, the Liberal Democrats are not always known for their consistency.
	I also recognise, however, that there is some concern about the fact that the potentially exempt transfer system, which deals with lifetime gifts, gives the wealthy opportunities for reducing their IHT bill that are not open to many people on middle incomes whose major asset is the home in which they live. We are certainly open to considering reform of the PET rules, but we would approach that with caution. It is suggested that it would be possible to fund lifting the IHT threshold via an extension of the seven-year rule for potentially exempt transfers, but that would be risky.
	It is not clear how the change would work in practice, as we do not have a Liberal Democrat amendment to consider. Even more importantly, it would be difficult to predict what, if any, additional revenue would be raised simply by extending the relevant period. It would be impossible to guarantee that enough extra revenue would be raised to fund a significant increase in the threshold. An extension would have an impact on behaviour that would not be easy to predict. In many cases, extending the PET period might well simply prompt people to shift back their lifetime gifts, and the result would not be a huge additional revenue accruing to the Exchequer.
	I am also concerned about the practical constraints that we would have to address to ensure that such a reform worked. The further back the rules permitted the Revenue to go in looking at lifetime transfers, the more difficult it would be to prove that they occurred and to establish what happened. Moving to a 15-year period would make it difficult for HMRC to keep track of records sufficiently and to be able to enforce the change effectively. I understand that in the past the Treasury and HMRC have given some consideration to a change along the lines of that suggested by the hon. Member for Falmouth and Camborne, but have dropped it on the grounds that it would give rise to several administrative difficulties and costs and yield uncertain returns. If reform of the PET rules were used to fund changes or increases in thresholds, it would have to be borne in mind that any additional revenue would not accrue to the Exchequer for at least seven years, so any changes to the threshold that were to be funded by that method would have to be postponed as well.
	There is a broader point to make, and I value the opportunity that the Liberal Democrats have given us to consider these issues. It would be a mistake to tinker with just one aspect of how IHT works. If workable reform is to be seriously considered, we need to examine how the IHT rules work as a whole and consider all the options rather than just the PET regime in isolation. The Institute for Fiscal Studies is working on the Mirrlees report, which will include a study on IHT in its project to increase efficiency and fairness in the tax system.
	In view of the importance of considering a range of issues to do with how IHT works, I mention one further matter that I drew to hon. Members' attention in Committee, where it was dubbed "the sister problem". It relates to long-term cohabitees. Some categories of people cannot use the exemption that exists for transfers between husbands and wives or civil partners. Examples might include people who have lived with and cared for an elderly parent for many years, people with learning disabilities who might similarly have lived with parents over a long period in the same home, or two siblings sharing a home. I drew the Committee's attention to the case of my constituent, Ann James, who lives with her sister in a house that they have jointly owned for many years. She is very worried that the house will have to be sold should she die before her sister or vice versa. In assessing the options for IHT reform, the House should bear in mind the situation in which Miss James finds herself.
	This debate has given the House a useful opportunity to examine and highlight the anxiety and resentment that many people feel about the expansion in the scope of inheritance tax during the Chancellor's years at No. 11 Downing street. It has also given us a chance to explore important issues to do with the operation of the tax and the options for reform. The Opposition will continue to work for a wide-ranging reform of our tax system as a whole to make it fairer, simpler and more efficient, and will of course include in that process consideration of IHT.

Julia Goldsworthy: I welcome the opportunity to discuss this issue, and we have had a constructive debate. The hon. Member for Chipping Barnet (Mrs. Villiers) was right to highlight the constraints on raising issues in the Finance Bill, in regard to which issues may be raised and whether we may discuss matters that might have an impact on revenue raising. I welcome the generally constructive tone of the debate.
	The hon. Lady was also right to say that, if such changes were introduced to lifetime gifts, we would not see an immediate impact on revenue and it would be difficult to judge the impact of such measures on behaviour. I refer her back to the comments made by the Minister last year, however, when we were discussing the inheritance tax treatment of trusts. The debate revolved around the fact that problems were being caused by individuals who were seeking to get round the inheritance tax rules but who did not want give up control of their assets. That is the key point that I want to raise in talking about extending the time limit for lifetime gifts. Such an extension would still allow people to make a lifetime gift, but it would raise the issue of their having to give up full control of the asset at the time.
	I gave an example of a couple who lived with their parents, and the hon. Lady gave another example of people who might fall foul of the existing legislation. Part of the problem is that they possibly do not even realise that they have done so until it is too late to do anything about it. Similarly, I am sure that some people who are caring for elderly parents will be caught by the changes to pre-owned asset taxes. They might have had the house given to them, but a parent could then move back in when they became too old. These problems are likely to raise their head at difficult times in people's lives.
	The Minister talked about the above-inflation increase in the threshold for inheritance tax, but I must point out that house price inflation is very different from retail prices index inflation. There have been hot spots in which there have been massive increases. The hon. Lady mentioned the south-east where there are historical pressures, but parts of the south-west have also had massive house price increases. Combined with the fact that incomes are low there will be significant difficulty, in particular in some of the coastal villages in my part of the world where individuals know that they do not have a hope in hell of affording a property in the place where they were born and bred.
	There is widespread fear of inheritance tax, which may actually be greater among people who do not come within the tax's threshold at present. However, they fear the tax because they see that the threshold is not keeping pace with house price inflation, which in most cases is their main asset. The issue needs to be addressed, but it has not been, even by the increases that have been made so far. The increase in the Bill is welcome, but it is unlikely to be sufficient. Unless something is done, more and more people will continue to be caught by inheritance tax.
	I beg to ask leave to withdraw the amendment.
	 Amendment, by leave, withdrawn.

Paul Goodman: First, we welcome Government amendment No. 1, on the regulations referred to in the clause. The Economic Secretary wrote about them to my hon. Friend the shadow Chief Secretary and the hon. Gentleman will doubtless address them in a moment.
	Our amendment No. 6 makes a relatively minor inquiry about a small part of the clause. It is not entirely clear why it is necessary to write it in the Bill that the regulations referred to in subsection 58C(2) may
	"refer to a scheme or process".
	I understand why it is necessary to include provisions in the regulations for the establishment of a "process of certification", in paragraph (b), and for the establishment of a process of "certifying energy efficiency" in paragraph (c). However, it is not clear why the fact that the regulations may refer to something needs to be on the face of the Bill, so we would be grateful for clarification on that point.
	By proposing that the regulations lapse after a year, amendment No. 7 allows us to make further inquiries about the scheme that the clause proposes. It is clear that the scheme will provide for a number of zero-carbon—or more properly speaking, energy efficient—homes, which is why we welcomed it in Committee. What is not clear is whether it will provide the number that the Government claim it will provide eventually. After hearing the Economic Secretary's reply to the debate in Committee, we were more doubtful about whether the scheme would provide that number than we had been before he stood up to speak. Anticipating his response that that reflects more on us than on him, I shall share with the House the causes of some of the difficulties encountered by the Committee.
	I shall not linger long over the mystery of the current number of energy-efficient homes. At column 139 of the Committee report, the Economic Secretary said that there were
	"few or no zero-carbon homes";
	but by column 141, when he had been asked to choose between two estimates, he conceded:
	"I do not know the answer". ——[Official Report, Finance Public Bill Committee, 15 May 2007; c. 139-41.]
	I accept that the point is relatively minor, although the Chief Secretary had previously told that supreme constitutional authority—Jeremy Paxman of "Newsnight"—that he thought there were "a couple of dozen". On Second Reading, he said:
	"a development of zero-carbon homes is going forward at Gallions Park in my constituency".—[ Official Report, 23 April 2007; Vol. 459, c. 661.]
	A reasonable observer might assume that "going forward" meant that planning permission had been granted, but the Economic Secretary confirmed on 15 May that it had not yet been granted, so those with an interest in London planning matters should note that when Ministers say a development is "going forward", they presumably mean—to quote the Economic Secretary—
	"The London Development Agency has earmarked the site."
	At any rate, the Economic Secretary was unambiguous about the target. He said:
	"we intend to get to the point where 200,000 such homes are built each year by 2016—that is the ambition."— ——[Official Report, Finance Public Bill Committee, 15 May 2007; c. 138-39.]
	We also know, because it was announced last May, and re-announced this May, that the Chancellor wishes five eco-towns to be built containing 100,000 energy-efficient—or if the Economic Secretary would prefer, zero-carbon—homes in total.
	That returns us to whether the Government are likely to achieve those goals. My hon. Friend the Member for Braintree (Mr. Newmark), who is in his place, announced a rough calculation in Committee. Assuming that each new energy-efficient house went on the market at £200,000, he argued, the Treasury would lose a total of £200 million in stamp duty if 100,000 of those houses were built. He then drew our attention to paragraph A2.10, on page 230 of the Red Book, which says:
	"The Exchequer cost is expected to rise to around £15 million by 2011-12."
	As he said, that suggests that by 2012 only 7,500 energy-efficient homes will have been built, and by his calculation it will take 13 years in total to build the Chancellor's 100,000 homes. My hon. Friend's figures may be rough, but on the basis of the figure that he dug out of the Red Book, it is hard to see how there can be an acceleration from about 7,500 in 2012 to 200,000 only four years later.

Julia Goldsworthy: The most difficult part of the proposal is that it is likely to increase demand rather than deal specifically with those who supply housing. We need incentives for the people who develop property as well as for those who want to purchase it. The incentive will have an indirect effect if we go straight to the demand side. A significant number of new properties will be built in my constituency. We already have difficulty convincing the developers that there is a demand for energy-efficient properties. Although the proposal provides an incentive, I am not sure how much it will do to convince property developers of the case. There is so much unmet demand that they could simply build unenvironmentally friendly houses and still have no problem selling them. That is the core of the difficulty for me.
	I welcome the Government amendment, because it means that we will be able to move on from the hypothetical and extended debate that we had in Committee, and are reliving today, to a more tangible one about what a zero-carbon property will be. I look forward to seeing the regulations, because—given my experience in my constituency—the Bill raises some key questions about what a zero-carbon property means. Does it mean zero-carbon in terms of running costs or the energy required to build the property in the first place?
	The Mount Pleasant ecopark just outside my constituency undertook to try to build workspace with as minimal an impact on site as possible. It was constructed with materials already on the site, instead of by bringing in cement and other building materials. That was a brilliant initiative and the resulting workspace has been taken up quickly, but it met with huge difficulties, including in securing the permissions and in developing the technologies to do it. For example, the walls of the property are made out of rammed earth from the site, and the result is a beautifully coloured surface, but some bizarre tests had to be carried out to prove that it was strong and durable enough. The tests included dropping a piece of the earth from shoulder height and if it broke into between three and seven pieces, it was appropriate for rammed earth construction. The expertise and techniques involved could bring huge benefits, but it is not clear whether the Minister intends it to develop it that far. That will need to be made clear in regulations, because if the proposal is to be truly ambitious it should include not only the energy use of the building after it has been built, but minimising the impact that new build has on the environment, not least because some ambitious targets have been set for meeting the demand for homes.
	On the Opposition amendments, I agree that the regulations should include the method for claiming stamp duty relief, and I understand that that is the intent of amendment No. 6. I wonder whether the methods that have been mentioned will be affected by the Government's change in policy on home information packs. In Committee, it was pointed out that Cornwall is an objective 1 area, so there was an opportunity for new workspace to be part funded by that programme. Because of the huge demand, the opportunity was taken to set higher environmental standards. The problem was that there was no one within a 300-mile radius who was able to assess whether that workspace met those criteria. So we must not only set high aspirations but ensure that there is a way of delivering them. The obvious way would be through the home information pack process, but that has now been seriously undermined. We already know about the difficulties of finding the capacity to deliver that.
	Amendment No. 7 would introduce a sunset clause of one year. I wonder whether it might have been more practical to have a mechanism for reporting back, so that we could judge the effectiveness. Key questions remain, including how many people will benefit. We have had contradictory information from the Red Book and what Ministers have said. Fundamentally, the issue is that if we are serious about making homes more energy efficient, we have to tackle the existing housing stock, because the majority of it will still be standing in 50 years' time.
	Unless we tackle that issue, people will find it difficult to make their own individual effort to tackle climate change. There are some good practical examples, such as social housing stock in my constituency that has been retro-fitted with a ground source heat pump which has reduced the environmental impact of those properties and is also saving the people who live in them hundreds of pounds a year in heating bills. If we do not look at existing housing stock, what we can achieve through this mechanism will be severely constrained.

Brooks Newmark: The hon. Lady's question makes my very point: the problem is that the Government do not create any definitions. They have grand schemes but do not define what we need to do or where we are going.
	As I said, the background to the regulations' introduction is not reassuring. We do not seem to know where we are now, let alone where we will be in 2012 or 2016. The Deputy Prime Minister once said, in an immortal phrase, that the green belt was a
	"Labour achievement and the Government intend to build on it."
	In a similar vein, the Economic Secretary accused Opposition Members of being
	"consistent in their opposition to taking forward concrete action on the environment"— ——[Official Report, Finance Public Bill Committee, 15 May 2007; c. 134.]
	Clearly, there was no irony there.
	My hon. Friend the Member for Tunbridge Wells (Greg Clark) has exposed how successful the Government have been at concreting over the environment. They are at the top of the class in that respect, but the foundations of their proposals on eco-homes are a little less concrete.
	Such homes involve technology that is new and untested. Either it does not yet exist, or it is experimental and somewhat uncommon. The choice depends largely on the mood of the Economic Secretary. We are justified in feeling a little suspicious of the Government's record on using taxation to effect behaviour change.
	I was concerned in Committee, and I remain concerned now, that the Government have proposed a tax relief that will chug along for several years without regular monitoring, and then simply stop. In addition, the relief is founded on the paradoxical assumption that it will contribute in some way to the Chancellor's thrice-announced 100,000 new eco-homes for a magical total of—and I do not get the maths here— 200,000 by 2016. According to the Red Book, those houses will come in at a cost of only £15 million by 2102. Either the incentive will be used widely, in which case it will cost more than the £15 million predicted by the Government, or it will not work and will need to be rethought.
	I pointed out in Committee, and it is worth reiterating now, that some £130 million has been spent on seven millennium communities, delivering homes to the "excellent" standard. I was amused to see—I made this point in Committee—that one of the seven communities, in east Manchester, was, in true new Labour fashion, named New Islington. It is a wonder that the Chancellor did not go the whole hog and call a street there Granita or New Granita.
	The fact remains that, after 10 years, the homes have not been delivered, so the idea that a large number of homes will be built in time to take advantage of clause 19 is optimistic—or indeed over-optimistic. The Economic Secretary talked of a non-linear projection for uptake, but was unable to provide figures for the uptake of eco-homes by the 2012 cut-off point for the regulations. Even using a curve rather than a straight line, it ought to be possible to extrapolate back from the aspiration of 200,000 eco-homes in 2016 and give us at least a ball-park figure for uptake by 2012—it could even be a Gallions Park figure. In the absence of that figure, my hon. Friends have proposed the only workable answer to the Treasury's remarkable opacity and confusion on eco-homes by requiring an annual review of the policy to see whether it is having the intended effect.
	The Economic Secretary offered the Committee a vague and open-ended commitment to review the regulations in or around 2012, if he is still around. That is not really a commitment at all, because it seems to depend on the prevailing circumstances. He also contends that this is a bold, innovative and radical policy, but let us hope that the Government have paid enough attention to his fourth adjective of choice and ensured that it is also coherent and that eco-homes will in future receive annual scrutiny.

Edward Balls: Unfortunately, I do not have with me the quotes to demonstrate that the Government have been trying to raise the number of new homes built, year by year—and indeed we have been succeeding. Over time, we aim to make more of those homes zero-carbon, through stamp duty relief. That has been difficult to do because of the continuing opposition of Conservative Front-Benchers and Conservative councils across the country. It is that political opposition to new house building that is holding back the productivity of our economy, and making life much more difficult for hard-working families.

Edward Balls: I did say that I would respond in detail to the contributions of Opposition Members, including the right hon. Member for Wokingham, and I hope to do so in a way that provides further substance and detail on the consultation that we are taking forward on the definitions. I hope that by the time I address amendment No. 7, I will have set out the procedures that we intend to take. They will give the right hon. Gentleman and other Opposition Members greater reassurance, and will allow us better to strike the balance between giving the industry some planning certainty on the one hand—that is very important—and making sure that we keep a close grip on that policy area and review our progress as we go along on the other. I hope that when I have made more progress, the right hon. Gentleman will find that I have addressed his point. If he does not think that I have done so, I will, obviously, take a further intervention from him.
	Clause 19—he said, turning to his speaking notes after some time—deals with the exemption from stamp duty land tax for new zero-carbon homes announced by my right hon. Friend the Chancellor of the Exchequer in his pre-Budget report and his Budget statements. The clause amends the stamp duty land tax legislation in the Finance Act 2003 by inserting new sections that provide for a relief or exemption for the first sale of new zero-carbon homes. I am sure that anyone following this debate will be entirely clear that that is what we have been discussing for the past 15 minutes. The new sections enable the Government to make regulations that define new zero-carbon homes, quantify the amount of relief or exemption, and deal with administrative matters.
	The relief is an attractive incentive to those who wish to build and live in greener homes, as it will allow a relief of up to £15,000 on stamp duty land tax; the figure will depend on the sale price of the house. The regulations will cease to have effect at the end of the five-year time limit, on 30 September 2012, unless a decision is taken to extend that period. I will come back to that point later. The regulations were made available in draft before the Public Bill Committee debate on 22 May, as the hon. Member for Wycombe said. In that debate, I said that it was an important part of the Bill and that the regulating power that we were making was significant, too. It was important that we consulted properly. We have asked for comments on the draft regulations from more than 200 different bodies with an interest in greener homes. The consultation closes at the end of July and we will consider the responses before finalising the regulations and debating them in the House. The hon. Member for Wycombe gave the impression that the response from external stakeholders was not positive, but Mr. Paul King, the chief executive officer of the UK Green Building Council and campaigns director for WWF, referred to the codes for building regulations—I shall come on to them in a moment—as
	"a big step in the right direction".
	He said:
	"There are developers now with zero-carbon developments in the pipeline. To get from the pioneers to all developers within 10 years is realistic."
	Mr. Zoltan Zavody, strategy manager of the Energy Saving Trust, said:
	"Suddenly, the renewables industry can invest in capacity. It knows that there will be a requirement to use its products."
	There have therefore been positive comments about the measure.
	It is right, given the novelty of the regulations, that we should initially deal with them under the affirmative, rather than, the negative procedure as originally planned, to ensure that the House has a further opportunity to scrutinise their details before they come into effect. In Committee, I said that I would consult the business managers to see whether it was possible both to undertake proper consultation and to use the affirmative procedure. Such is the interest in this policy area that a debate on the affirmative resolution is appropriate. I am therefore pleased to tell the House that the amendment I have tabled to clause 19 provides for the first set of regulations to be made, subject to affirmative resolution by the House of Commons. We believe that that is the right approach but, because of the importance of consultation and the short window of parliamentary time between now and 1 October, we will not be able to bring the regulations into force on 1 October. That is simply a consequence of the parliamentary timetable. On present plans, we intend to lay the affirmative instrument as soon as Parliament returns from the summer recess, and once our consultation is concluded. Our objective remains to ensure that the regulations are approved by the House at the earliest opportunity allowed by the parliamentary timetable.
	I have looked at the matter in detail, because I wanted to ensure that we did not hold up in any way the forward movement towards zero-carbon homes, which I am sure everyone wants. When we introduce those regulations as part of the affirmative procedure, we will provide for the measure to be made retrospective to 1 October 2007. That means that no one who completes a transaction on a new zero-carbon home between 1 October 2007 and the autumn date on which the regulations are finally agreed by the House will be deprived of the opportunity to claim relief from stamp duty land tax. After the regulations have come into force, individuals who wish to claim relief for transactions made in the period between 1 October and the date on which the regulations come into force can do so simply by amending their stamp duty land tax return and Her Majesty's Revenue and Customs will repay any overpaid tax. If, by October or November, new zero-carbon homes are still being built, that will not be too onerous a task for HMRC, and we hope to make progress. However, if new homes are in that situation, we have made provision to ensure that no one suffers a setback as a result of the slightly longer timetable required to ensure that the affirmative resolution procedure is used properly after the consultation.
	We are determined to get the regulations right through consultation and parliamentary debate. It is important, too, that the regulations are set within the wider context of co-ordinated action across Government by the Minister for Housing and Planning and the Chancellor of the Exchequer to achieve zero-carbon homes. Zero-carbon homes, as we set out in the pre-Budget report and the Budget, are important if we are to achieve our target to reduce overall carbon emissions in 1990 by 60 per cent by 2050. Over 25 per cent. of all carbon emissions in the UK result from energy use in the home. By 2050, about one third of homes will have been built after 2007. If we can ensure that as many as possible of those homes—and our goal is that it should be all of them—are zero carbon and make no net carbon emissions over the course of a year, that will make a significant contribution to the 2050 target.
	In recent years, we have used building regulations to improve the energy efficiency of new homes. Changes to building regulations in 2006 have achieved a 40 per cent. improvement compared with pre-2002 standards, and a 70 per cent. improvement compared with pre-1990 standards, in the energy efficiency of new homes. The importance of the regulatory context will become clear in a moment. We want to go further and use regulations to require new-build houses to meet a zero-carbon standard from 2016. We need to give the house building industry time to adjust to the changes needed in technologies and methods, which is why we have announced the target date in advance and why my right hon. Friend the Secretary of State for Communities and Local Government launched a consultation on changes to building regulations before Christmas, and set out the road map to the zero-carbon standard. The consultation has now ended, and the Government will respond to it in the summer, along with our consultation on stamp duty land tax.

Edward Balls: I certainly think that we need to work closely with local government to meet those objectives, so I agree with the hon. Lady. I fear that if my answer to her is too detailed I will stray beyond the scope of the clause, but I very much accept the tenor of her comments.
	The hon. Lady will agree that building regulations are not all that is needed to meet the objective. We need to ensure, too, that the planning system helps to encourage lower carbon emissions and does not present a barrier to the development of new homes—that is a matter for local government. We have therefore consulted on a draft planning policy statement on climate change, and we will publish the final document later this year. The consultation on building regulations sets out interim steps, but we have taken other initiatives as well. We have, for example, suggested that improvements be made to building regulations in 2010 and 2013 before going to zero- carbon status in 2016. We also launched the code for sustainable homes as a voluntary standard in England. It allocates a star rating from one to six to new homes, thus assessing their overall sustainability performance, and it sets out our aspirations for new-build housing. We have proposed, too, making rating against the code mandatory from April 2008. Code level 6 represents a zero-carbon standard, and I shall explain why that is relevant to our debate.
	The new stamp duty land tax exemption is an important building block, and it completes our strategy. Our long-term goal is to achieve a zero-carbon standard in all new homes by 2016, but with technology in that area moving so quickly, it is difficult and undesirable for anyone to try to predict precisely what standard we will have to meet in 2016. We do not know what technological developments lie ahead. On the other hand, we want early action to kick-start the market—in Committee, we had rather a long debate about the definition of "kick-start"—so the stamp duty land tax exemption will sit alongside code level 6 as an incentive.
	Following our consultation and discussions in Government, I can set out today our view that it is important that these two initiatives, code level 6 and the definition of zero-carbon homes in our stamp duty land tax regulations, are aligned so that we can adopt the same definition of zero-carbon homes. I therefore propose, following consultation with ministerial colleagues, and subject to the outcome of the consultation and the debate that I promised Parliament later this year, that we will aim to align the stamp duty land tax exemption definition with the code level 6 definition. Starting with a common definition will maximise certainty for house builders in the crucial early stages.
	We are still consulting on these issues, but I can give hon. Members two examples of what the alignment may mean in practice. First, following the publication of our draft regulations, we are now inclining to the view that both the code and the stamp duty land tax exemption should include the provision that, initially, a zero-carbon home for stamp duty land tax purposes could be connected to the gas mains, provided that there was adequate offsetting for the gas burned through renewables provision. Similarly, we know that it is sometimes more efficient for renewable energy to be provided on a development-wide basis, rather than house by house. This is another area where we want to adopt the same approach in both instruments.
	In both examples, without pre-empting the consultation that is under way, we will seek to achieve that in the regulations that we intend to put before the House under the affirmative resolution procedure.

Edward Balls: On one reading of the draft regulations that we published, those parts of the country that do have gas mains might have been excluded. The indication that I am giving today is that we are minded to allow areas with a gas main to benefit, potentially, from the stamp duty land tax, provided that there is adequate offsetting for the gas burned through renewables provision. Clearly, in areas that do not have a gas main, the issue does not arise. That is one of two areas in which we are seeking to be clearer in regulations in order that we can align code level 6 with stamp duty land tax regulations when we publish them.
	Of course, over time we will need the flexibility to change the definitions. Because it is a generous tax relief, we need, first, to be sure that the SDLT exemption is working as intended—that is, genuinely incentivising innovation through the early build up of zero-carbon homes on the road to 2016. Secondly, as hon. Members would expect in an area of tax policy, we need to ensure that we take the right steps to tackle any potential tax avoidance. Following consultation, I am therefore committing the Treasury today to conducting an interim review of the SDLT definition of a zero-carbon home halfway through its five-year life for the express purpose of testing the exemption against those two criteria.
	Furthermore, as I said in Committee, we will carry out before the end of the five-year time limit a full review to assess whether or not we should extend the tax relief, and we will
	"give a clear, public signal of our future intentions well in advance" ——[Official Report, Finance Public Bill Committee, 15 May 2007; c. 137.]
	of the five years. So there will be the review in advance of the five-year end point to see whether, in order to achieve the incentivisation that we seek, we will need to extend the SDLT provision after five years, and there will also be a review after two and a half years to see whether the definitions continue to be aligned, whether we are achieving our objectives, and whether we need to tighten or loosen the definition.
	By announcing that intention today, we are giving the industry and home owners fair warning that we are setting a high standard which we wish to see new houses reach in return for the tax relief, but that we are willing for the moment to offer flexibility in the definition to kick-start the market, particularly in the areas that I highlighted a moment ago. We need at all times to balance our requirements for a robust tax definition that delivers value for money against the need for an achievable standard in the short and medium term to incentivise the development of the market. We believe that the process that we are setting out today, the consultation in which we are engaged and the affirmative resolution procedure will allow us to do so, and to align code level 6 and our regulations to give clarity and certainty to the market.
	Having set out our overall strategy, what we are doing to implement it and what additional steps I can announce today as part of the consultation, I shall deal with the amendments to clause 19 proposed by the Opposition. Amendment No. 6 proposes the deletion of subsection (2)(a). The subsection provides that the regulations may
	"Refer to a scheme or process established by or for the purposes of an enactment about building"
	in relation to the evidence that a building satisfies the definition of a zero-carbon home for the purposes of the relief.
	The amendment would remove a paragraph which allows the regulations to refer to schemes or processes established for the purposes of another enactment. In particular, it would mean that evidence in the form of a certificate or a letter relating to the zero-carbon home criteria but issued by an assessor accredited for the purposes of the Energy Performance of Buildings (Certificates and Inspections) (England and Wales) Regulations 2007 could not be adduced as evidence that a house qualifies for relief from stamp duty land tax.
	The assessors in question—SAP, or standard assessment procedure, energy assessors—are the only class of people who can produce energy performance certificates for newly built homes. They are a different group of energy assessors from the domestic energy assessors who are being trained to produce energy performance certificates for inclusion in home information packs. The new home assessors have been up and running for some time.
	If we did not allow taxpayers to adduce such evidence, we would lose much of the evidence base that would be used to evaluate whether a home was zero carbon or not. That is particularly important because the decision on stamp duty is made at the moment of purchase, whereas we are trying to incentivise homes to be zero carbon throughout their lifetime. If we could not use the evidence produced by those assessors, we would have to use other, perhaps less reliable, forms of evidence to evaluate a home's entitlement to the relief.
	If HMRC had to develop a new accreditation system, that would be tantamount to reinventing the wheel. Such an approach makes no sense. It would mean increased costs for builders as they would face more regulatory burdens to build zero-carbon homes, because they would face one set of mandatory tests for the purposes of the energy performance of buildings regulations and another to satisfy HM Revenue and Customs that the relief is justified.
	In designing the relief we have tried to build on existing structures, and I do not see how the amendment would help. We are trying to encourage the building of zero-carbon homes by developers, not to make them go though additional tests. When developing proposals for the relief, we thought that builders should be able to draw on the use of existing material from other legislation to adduce the home's entitlement to the relief from stamp duty land tax. Energy performance certificates were initiated in January 2003 and it will be mandatory for an EPC to be issued when a new building, including a new home, is built, sold or rented out.
	The criteria for zero-carbon homes draw on the same methods of establishing energy performance of buildings as used for EPCs, although the criteria for zero-carbon homes goes beyond the assessment required for EPCs. The advantage of using the energy performance certificate system is that it already exists as a framework to assess the energy performance of buildings. To set up another system to deliver similar objectives and assess deliberately similar tests would be inefficient.
	Amendment No. 7 would insert two new paragraphs in the clause. The first new paragraph adds a requirement that the regulations made shall expire one year after coming into force. Further regulations permitting the relief would have to be laid. The second new paragraph—paragraph (9)—states:
	"Further regulations under section 58B may not be made unless they contain a provision specifying that they expire one year after coming into force."
	The amendment would limit the lifetime of any such set of regulations to just one year after their coming into force, after which either the relief would not be available or new regulations would need to be made annually affording the relief. As a consequence, parliamentary and Government time would have to be deployed every year in renewing the regulations on annual basis between now and 2012.
	Obviously, like most hon. Members, I recognise that the regulations that underpin this relief will change over time. That is inevitable as the zero-carbon homes industry is in its infancy and technological developments make change inevitable. We have made allowances in the clause to amend the regulations where such technical changes are needed. Indeed, I have today announced a two-and-a-half-year review to ensure that we are achieving our objectives of alignment and progress towards our goal. There is a considerable difference between having the flexibility to make changes to regulation if required and what is being proposed in amendment No. 7, which is essentially that, every year, the relief should be allowed to run only on a year-by-year basis, depending on renewal by the House. Our fear is that that would send a negative signal. Imposing a one-year time limit and having to renew the regulations each year would not provide developers with the certainty that they need in order to plan the development of zero-carbon homes. Given the length of time needed from land acquisition to sale of new homes, such an amendment could restrict house builders' opportunity to take full advantage of the tax exemption. In our view, the amendment would create uncertainty for homebuyers and also home builders, and significantly reduce their ability to plan ahead financially with a view to building a zero-carbon home.

Edward Balls: The hon. Gentleman is right that we need to strike this balance carefully. The two areas in which I have clarified our position in our desire to achieve alignment—gas mains and multiple homes—indeed involve ways in which we can offer the prospect, following consultation, of more generous relief through a more generous interpretation of zero-carbon homes in the early years when we produce the regulations in the autumn. We are making those concessions, but at the same time, we also have to ensure that we strike the right balance and do not open the door to substantial rebadging and tax avoidance relating to homes that do not really meet our zero-carbon objectives. We are trying to get a sensible and aligned, and in the early years generous, definition. Our two-and-a-half-year review is intended precisely to give us the opportunity to assess whether we are making that progress.
	As I said, however, to review year by year and particularly not to give any certainty that the regulations would continue after one year unless the House acts again, as the amendment proposes, would run the risk of holding back the market and making it too easy for Governments not to deliver on our commitment. We want to kick-start the market. Our fear is that the amendment would hamper the market's ability to kick-start, because it would be too easy to renege on an annual basis if Ministers of either party so desired.
	I should like to return to our debates in Committee and quote the contributions of some Opposition Members, who unfortunately are not all present. The hon. Member for Windsor (Adam Afriyie) said: "From my business background"—this was one of the numerous occasions on which he cited his business background—
	"and given how long it takes to build properties, it seems to me that putting a short time limit on the tax relief"—
	at that point, he meant five years—
	"sends a signal that the Government are uncertain whether the relief will continue. What confidence does that inspire in builders, who have to invest hundreds of millions of pounds developing new homes? It sends no confidence signal at all."
	I set out to the hon. Gentleman why I thought a five-year limit was a sensible point at which to assess the future of the relief. In the same debate, the hon. Member for Braintree (Mr. Newmark) said:
	"I am concerned that from the outset there is a limited window of opportunity—five years—attached to the scheme, however. As a business man, I point out that the technology required to approach the standard of a true zero-carbon home will require significant capital investment from developers to reduce the high unit cost of microgeneration technology." ——[Official Report, Finance Public Bill Committee, 15 May 2007; c. 137,126.]
	It is because we want to make sure that we achieve the incentive that we have not only set out a five-year relief, but said that well in advance of five years, we will make a public decision as to whether the relief will continue.
	I think that we are hearing a rather a confused message. The amendment tabled by Opposition Front Benchers proposes not an extension of the five-year time limit, but annual renewal of the regulations, while two Opposition Back Benchers suggested that five years was not long enough. I genuinely value the practical experience brought to the Committee by former and, as in the case of the hon. Member for Braintree, current business men when designing the relief, I do not think that they would agree that moving to an annual basis for making the decisions would be a sensible way to proceed.
	Let me quote Stewart Baseley, the executive chairman of the Home Builders Federation, another business man:
	"We welcome this package of measures in setting both the goal and direction for achieving more and greener homes. Progress will be achieved most effectively through a framework in which Government sets clear objectives, industry is given the space to deliver and consumers are on board."
	That is what we are trying to achieve with these measures. The amendments would not only add to bureaucracy, but by moving to an annual basis for making the decisions, they would have the opposite effect to that intended by hon. Members on both sides of the House and the Government, and also the Home Builders Federation.
	In conclusion, I hope that the House will agree that the Government amendment will add value to the process of developing better legislation and fulfil the commitment that I made in Committee to do everything I could to ensure that we had an affirmative procedure on this matter. I hope that I have given reassurance to the right hon. Member for Wokingham that we are making progress on the detail in order to achieve, within the scope of the clause, the objectives that we have set out. I hope also that we have satisfied the hon. Member for Falmouth and Camborne that we are making tangible progress in providing clarity in definitions, and that we have seen off some of what I think she called the cynicism that we heard in the Committee, which is not well founded in this particular policy area.
	I hope that we have persuaded hon. Members that presentation is not what this is about. I am sure that my colleague on the Labour Benches, my hon. Friend the Member for Grantham and Stamford, would agree that this is an area where substance not spin is the way forward. I therefore urge the House to deliver our 2016 zero-carbon home objective, to support the Government amendment and to reject both the amendments tabled by the Opposition.

Paul Goodman: I would not advise the hon. Gentleman to intervene, because the last time he did so he succeeded in broadening the debate so far that the Deputy Speaker had to get to his feet. We cannot possibly have that now, can we?
	Whatever happens to the Economic Secretary, we know that he is a perceptive man. He dealt with today's debate calmly and with a smile on his face, which suggested that he knows that the Government were rumbled in Committee. He was able today—we will accept this as a graceful form of retreat—to announce that there will be a two and a half year review, which we had not heard before and which he was good enough to share with us. He also provided some welcome details about the introduction of the regulations.
	One accusation that is occasionally thrown at us is that we do not want the measure to succeed. Although we are still sceptical whether the 200,000 figure will be reached, and although the Economy Secretary did not answer the point originally raised by my hon. Friend the cynical and sceptical Member for Braintree (Mr. Newmark)— [ Interruption. ]. If my hon. Friend is cynical about the Government's endeavours, he is entirely right to be so. We do not want to pursue any proposal that is likely to ensure that the scheme runs into difficulty. We accept that it will produce some zero carbon homes, although we do not know how many any more than the Economic Secretary knows how many there are currently. For that reason, we will not seek to press the amendment to a vote. I beg to ask leave to withdraw the amendment.
	 Amendment, by leave, withdrawn.
	 Amendment made: No. 1, page 14, line 37, at end insert—
	'"(5) The first set of regulations under section 58B (new zero-carbon homes) may not be made unless a draft has been laid before and approved by resolution of the House of Commons.'.— [Ed Balls.]

John Redwood: We shall probably not see that any time soon, even with the change of tenant at No. 10 Downing street, but as the hon. Member for Nottingham, South said, perhaps the House can do rather more under the previsions of the clause to provide examples of how we could generate more of our own energy. Members have already said that we generate a lot of hot air that could be used. I suspect we should need a spin turbine rather than a wind turbine, and the new tenant at No. 10 may be particularly good at offering a model that would offer facilities from which he and we might benefit.
	I urge Members on the Treasury Bench to understand the strong feeling that much more could be done. My hon. Friends and others clearly understand that at present the technology is not cheap enough to take off across the board, which is why so few people are adopting it, apart from those such as the hon. Member for Nottingham, South and my right hon. Friend the Leader of the Opposition, who are showing the way. However, to get our constituents enthusiastic about microgeneration we need to introduce real tax relief. The provisions do not do that; the amendments would help a little, but the amendment that requires an annual report might in due course persuade even the Government that they should join this exciting progressive consensus.

Jeremy Corbyn: Absolutely. Some collectivism is still alive and well on the Labour Benches, too.
	I support the proposals for annual reporting on microgeneration. If we are agreed on a policy of support for the idea of microgeneration, especially photovoltaic cells on the roofs of houses, it is obvious that we should consider it every year to see how successful or otherwise it has been and if need be change policy to encourage it further. A large number of people want to put photovoltaic cells on the roofs of their houses so that they can generate some or all of their electricity, with any surplus going into the grid. However, the costs are impossible, partly because, as my hon. Friend the Member for Nottingham, South pointed out, the grant system has ended and been subsumed into the carbon-neutral homes scheme.
	Secondly, because there are so few places in the country where such schemes operate the cost of the cells is enormous. That need not be so. We simply need to provide a reasonable grant system to encourage people to produce such energy, and reasonable tax incentives. In addition, where grants are awarded for improvements to any public or private buildings a condition should be imposed, such as the standards that apply to insulation and windows, that there should be a degree of microgeneration through photovoltaic and water-heating cells. That seems eminently sensible.
	As my hon. Friend pointed out, if we imposed such rules on new properties it would be helpful. We hope that there will be a big increase in the development of council and social housing, which would be a good opportunity to experiment and to encourage the use of more photovoltaic cells. However, the real issue relates to improvements to existing properties; for example, when people replace roofs or undertake major regeneration there would be a good opportunity to install microgeneration systems.
	The Treasury probably agrees with almost everything that has been said on both sides of the debate, so why cannot the Government accept the amendments? They have been proposed previously and the arguments have been well rehearsed. The argument for considering the success of the provisions is blindingly obvious. If we do not want to go down the road of developing more power stations, the answer lies in our existing buildings, where we can do something towards conserving energy—we have already gone a long way in that direction—as well as generating electricity. Towns in Germany, Austria and elsewhere have taken huge steps in that direction and have thus become centres of excellence for the development of microgeneration technology. Why cannot we do the same? Why are we holding ourselves back when we so readily understand and welcome the arguments?

Brooks Newmark: I turn first to amendments Nos. 3, 4 and 5. I have no need to rehearse the careful arguments advanced earlier in the debate today and in Committee on the issue. However, in the Committee of the whole House, the Chief Secretary implied that the question was one of intention, not of the volume of production—of which we have heard much today. The right hon. Gentleman said that the Government's proposals on microgeneration were
	"targeted at people whose primary intention is to consume in their home the electricity that they generate".—[ Official Report, 1 May 2007; Vol. 459, c. 1479.]
	That may be so, but clauses 20 and 21 are drafted in terms of the amount generated, not the intention behind the generation. Will the right hon. Gentleman attempt to put a figure on what he believes constitutes significant excess?
	Secondly, does the Chief Secretary anticipate any adverse impact on domestic energy efficiency if people realise that there is little incentive or indeed some risk of generating a significant excess? We have heard much about that point this afternoon. Lastly, would not it be simpler to forget the idea of intention altogether and stick with the generation limits already contained in the Climate Change and Sustainable Energy Act 2006?
	There is a compelling need for the Government's policy on incentivising microgeneration to receive some scrutiny, which amendments Nos. 35 and 36 will provide. As we have heard, the most significant challenges faced by those wishing to install microgeneration are the high start-up costs and, consequently, the length of time needed to justify the initial capital costs. In principle, at least, exempting from income tax the sale of electricity from domestic microgeneration is a step forward, as it would seem to speed up the return on that initial investment. I suspect, however, that the measure will make not a jot of difference; it is a classic case of gesture politics.
	First, there is no evidence whatever that HMRC has attempted to collect any tax in that context. If it had done so, the policy could have been curtailed in a memorandum of understanding rather than in legislation. Secondly, the sums involved, I suspect, will be truly minute. In any event, the Government are committed to clamping down on a significant excess of generating capacity, which suggests a policy that is pulling in two directions at once. We have no idea how successful the provisions are expected to be, or how it is thought that they will influence behaviour. While the Government are arguing over pennies, the pounds seem to be going astray. The low-carbon buildings programme seems to have restarted, but the general impression has been one of a policy in disarray and a lack of co-ordination across Government. Waiving income tax on electricity generation will not address the central issue of capital costs, and how else it can contribute remains to be seen.
	A report on the benefits of the policy would be most welcome so that the issue does not continue to obscure the significant challenges faced in the quest to take microgeneration into the mass market. Clearly, we are not there yet. Recently, I met representatives of British Gas to discuss the latest phase of its innovative scheme to incentivise microgeneration: Members with an interest in climate change and energy efficiency will have heard me wax lyrical previously about its successful partnership with Conservative Braintree district council to offer council tax relief in return for cavity wall insulation. That scheme has now been extended to a subsidy of microgeneration technology. However, the numbers are still, at least to my mind, marginal. It costs £11,000 to install a photovoltaic solar panel or, slightly better, £4,300 for solar thermal installation. In return, participants qualify for a one-off council tax rebate of £500 and £300 respectively, in addition to eligibility for a subsidy of about 10 per cent. from the low-carbon buildings programme. Those technologies require some 25 or perhaps 30 years to repay the investment, and are unlikely to have mass market appeal.
	I would like a report to be made to Parliament, as the amendments propose, to see whether the Government's policy has any impact on the numbers. If it does, I shall applaud them. The British Gas representatives whom I met wryly observed that one of the reasons for the scheme's success was that people preferred a tax rebate to a subsidy, even if the amount is the same. In the same spirit, perhaps a tax-free income from microgeneration will prove to be a similarly successful incentive. We shall have to wait for the report called for by the amendments, which I hope the Government will support.

Stephen Timms: The renewables obligation is proving to be an effective lever for raising the proportion of electricity generated from renewable sources. We have seen that rise pretty sharply over the past few years in response to the renewables obligation. There has been an animated debate in Germany about the costs of the feed-in tariff and other processes. I did not follow the election debate there closely, but I am told that that was a significant element of it. It is certainly not the consensus in Germany that the feed-in tariff measures are inexpensive. I am sure that one can present the figures in a variety of ways, but there is serious political concern about the costs of the arrangements.
	I am disappointed to hear that my hon. Friend has been unable to claim any ROCs for his own electricity generation. I shall take that point away and consider it. I agree that the mechanisms need to be accessible to change behaviour. There is no doubt, however, that the renewables obligation is starting to bring about the large-scale changes that we need for an up-scaling of electricity generation from renewable sources.
	The primary purpose of microgeneration is for people to generate their own domestic electricity, but they can, and are most welcome to, sell surplus electricity back to the national grid, as my hon. Friend has done. ROCs are available. I am confident that people are receiving those from domestic generation, although I shall check that point further. The certificates can then be sold to energy companies.
	However, receipt of income in that way raises the question of liability for tax. Uncertainty about the tax position has been a disincentive to the take-up of microgeneration. Clauses 20 and 21 aim to remove that disincentive. Together they ensure that householders do not face a tax bill by investing in microgeneration equipment for their own domestic use. They exempt from income tax and capital gains tax the proceeds from the sale of surplus electricity and from the receipt and disposal of ROCs. They remove the uncertainty and therefore the disincentive. I think that the House will agree that that is a welcome change.
	The precise value of the income tax exemption will depend on how much surplus electricity a householder will generate. A householder can expect to make between £120 and £240 a year from a wind turbine and perhaps £40 a year from a solar photovoltaic system, although that will depend on the weather conditions and the contracts that are in place. We announced in the Budget that the Government will ask the Office of Gas and Electricity Markets to examine how householders can benefit more from the prices paid to them when they export electricity to the grid. Perhaps that will give us an opportunity to address the problem of microgenerators accessing ROCs.
	The tax exemptions are available only for householders who have installed microgeneration primarily for their own domestic use. They do not apply to individuals who invest in microgeneration with the intention of selling surplus electricity or of dealing in ROCs as a commercial activity. That is right. The test of significantly exceeding the amount that they use themselves is simple and straightforward, and it ensures that the tax exemptions are properly targeted.
	It has been argued that the "significantly exceeding" test should be removed from both the exemptions, so widening the scope of the tax exemption to include those individuals who are seeking to make a commercial profit from domestic microgeneration. I argued in Committee, and argue again now, that that would be ill advised. The clauses provide clarity for householders who are involved in microgeneration. They ensure that unless an individual is trying to make a significant profit, he will not face a tax charge as a result of microgenerating electricity.

Stephen Timms: The test is based on intention. Most householders are not installing microgeneration systems that substantially exceed their total consumption in a year. As long as that is the case at the point of installation, depending on the circumstances, I do not think that they would be caught. However, it is right that a business based on commercial microgeneration should pay tax on its profit just like any other commercial activity. To do as the amendments propose would be unfair. They address a problem—uncertainty about the tax position—that does not exist if the primary purpose is commercial. It would be odd to give tax incentives to electricity companies to set up power stations in people's homes, to use the right hon. Gentleman's phrase. Why should there be a tax unfairness against renewable generators? That would be the wrong way to go. The "significantly exceeding" test is the right approach. I hope that the amendment will be withdrawn.
	By deleting clause 21, amendment No. 35 would remove entirely the exemptions for both income tax and capital gains tax which apply to the receipt and sale of ROCs. That would simply perpetuate the uncertainty—indeed, it would make the uncertainty worse for householders who have invested in microgeneration equipment for their home—and undermine the aim of removing uncertainty, which from the tenor of the debate is something that I think the whole House would support. That uncertainty has discouraged take-up of domestic microgeneration. Removing the clause would make the position worse again.
	Finally, I come to amendments Nos. 34 and 36, which would impose a statutory obligation on the Treasury to publish an annual report on the effectiveness of the new income tax exemptions. I noted in particular the heartfelt nature of the calls by my hon. Friend the Member for Nottingham, South (Alan Simpson) that the Treasury should take that on. I know that we have had this debate before, but I make the point to the whole House again. Last year, the Government published their microgeneration strategy, which included the commitment to assess progress on a continual basis and publish a report each year as part of the annual report on the Energy White Paper. There is no case for duplicating that with another report along those lines.
	Nor do I agree with my hon. Friend that nothing ever happens unless the Treasury takes charge of it. That is a counsel of despair. The Secretary of State with responsibility in that area rightly has the lead responsibility and has to report in collaboration, of course, with the Treasury. I can tell the House that Treasury officials have met representatives of the microgeneration industry a couple of times just in the last six weeks. The Treasury is firmly engaged with this issue, but does not have the policy lead, which rightly rests with the Secretary of State, and that is also where the reporting duty should rest.

Paul Goodman: This has been an interesting debate and it has formed itself around an observation by the hon. Member for Nottingham, South (Alan Simpson). He argued that what one does not report on, one is less likely to be held accountable for. What one is not held accountable for, one is not likely to have much of an incentive to improve. If the Treasury were to report once a year on the effectiveness of its microgeneration strategy, it would set out clearly how successful it expects the strategy to be; it would raise expectations and standards; the Treasury Committee would take great interest in it; and it would enable the Government to be held to account for what they are doing under these two clauses.
	The main amendments that we propose, amendments Nos. 34 and 36 are simple. They ask the Government to give an assessment not of their wider strategy, but simply of how successful they expect the clauses to be—

Paul Goodman: The Chief Secretary has simply argued that it would be duplication for the Treasury to produce a report about tax, which is its responsibility and not the responsibility of other Departments. The Chief Secretary, who is indeed prodigiously intelligent, was radiating institutional resistance to the idea that once a year the Treasury should be required to report on how effective the measures are likely to be.
	I cannot ask the House to vote on all the amendments, but I will pluck out the main one, so it is our intention to press amendment No. 34 to a vote. We regret that, in his last full day as Chancellor, the Chancellor and his Ministers have not taken the chance to join the consensus that has been demonstrated across the House this evening. I beg to ask leave to withdraw the amendment.
	 Amendment, by leave, withdrawn.
	 Amendment proposed: No. 34, in page 15, line 17, at end insert—
	'(3) The Treasury shall prepare and lay before the House of Commons annually a report on the effectiveness of the tax relief mentioned in subsection (1) in achieving its objectives, with particular reference to the change in the amount of electricity generated by microgeneration systems.'.— [Mr. Goodman.]

Julia Goldsworthy: I beg to move amendment No. 39, page 27, line 2, leave out clause 35.
	The intention behind the amendment is to raise concerns about the impact of changes to the industrial and agricultural buildings allowances on particular businesses. I want to highlight the comments of the Institute of Chartered Accountants in England and Wales, which said at the outset:
	"We recognise that the changes to the capital allowances rules are part of a balanced package that has also seen the headline rate of corporation tax reduced from 30 per cent. to 28 per cent."
	However, it goes on to say:
	"Nevertheless, we have many concerns about the proposed changes and the underlying policy, particularly given that smaller businesses will not benefit from the 2 per cent. cut in the main rate of corporation tax."
	The key concern is that there does not appear to have been sufficient consultation on the impact of the changes. Although there is a consensus that there is a need for reform to the tax system, questions have been raised about the motivation for the proposal we ended up with in this year's Finance Bill. Was it a considered attempt to reform the tax system or was it something included at the last minute to try to make the corporation tax proposals as a whole add up?
	The allowance or charge for businesses on disposing of agricultural and industrial buildings is being withdrawn for disposals taking place after 20 March 2007. I understand that in next year's Finance Bill the annual writing-down allowance will be phased out. If the move was a considered one, it is certainly not regarded in that light by businesses directly affected by the changes. Like other Members of the Public Bill Committee, I have been contacted by an organisation called Towngate Estates Ltd, which will be greatly affected by the changes.
	The person who wrote the letter wanted to highlight the impact that the changes would have on his business and, in particular, he wanted to highlight the lack of consultation. He writes:
	"Over the past few years the Inland Revenue has produced a number of consultation documents on the reform of corporation tax. I am aware of documents in August 2002, August 2003 and December 2004."
	In his comments, he quotes the August 2003 paper, which says:
	"it is envisaged that the new relief would replace and extend the current Industrial Buildings Allowances and Agricultural Buildings Allowances".
	As he goes on to say, there was no reference to the fact that IBAs would be stopped altogether. In fact, the language is about extending and reforming the existing allowance, rather than about getting rid of it. The same goes for the December 2004 paper. Again, the paper suggests that the allowance could be extended. The person writing the letter concludes by saying that, in 2011, the proposals
	"will cost the company an extra £53,000".
	That is a real example of what I am talking about. There has not been adequate consultation.
	My other concern is how the change will impact on different sectors. One of the concerns raised by the Institute of Chartered Accountants is that it is more likely to impact on a number of UK business sectors, including manufacturing, farming and capital intensive sectors such as the hotel trade, which is currently anticipating the need for capital investment prior to the forthcoming Olympics. My concern is that people involved in those businesses will be affected by the changes on the basis of decisions that they may have made up to 24 years previously. In that respect, the change has a retrospective impact. That relates to the comments we made yesterday about how the small business rate increases would impact on different sectors and regions of the economy, depending on how they were weighted in terms of how capital intensive they were, the size of the business and what it was focusing on.
	That concerns me, because I have businesses in my constituency that will be affected. There is a farm in my constituency—like most farms in Cornwall, it is very small—that made one of the first commercial objective 1 grant applications for European funds that were available to try to help develop the economy in some of the poorest parts of Europe. The farm made use of that allowance to diversify into cheese production and it qualified for agricultural buildings allowance. The farm has an ABA residue of only about £15,000; the dairy, which is newer and has been more heavily invested in, has a residue of more than £300,000. The point is that decisions to invest were made in good faith and jobs have been created as a result, but now that is being placed under threat because of a decision taken at a much later date. I am sure that there are similar examples all over the country.
	I am reminded of the merits of the new clause tabled by the right hon. Member for Birkenhead (Mr. Field), which we discussed yesterday. He talked about the need for real clarity in terms of the impact of personal taxation changes on particular groups. This is another classic example of where we need to understand the interrelated impact of lots of taxation decisions in the Finance Bill on different business sectors in different regions. Businesses also need to understand how all the proposals interact.
	As I bring my remarks to a close, I want to highlight again the concerns of the Institute of Chartered Accountants. There are concerns that there has not been sufficient time for detailed consultation and consideration and there is a feeling that the Government should withdraw the clause at this point in order to undertake more consultation and consideration. If they will not do that, will they grandfather existing assets so that companies such as the farm in my constituency do not face a much more uncertain tax future?

James Paice: I want to address the way in which the agricultural buildings allowance affects tenant farmers. I am sure that my hon. Friend the Member for Fareham (Mr. Hoban) will cover the wider aspects of the amendment. However, I doubt that the Treasury talked to the Department for Environment, Food and Rural Affairs about the matter and examined the agricultural holdings legislation.
	Some 40 per cent. of farmers in this country are tenants who do not own the land on which they farm. Agricultural holdings legislation—tenancy legislation—allows them, with the permission of the landowner, to construct buildings on the land, but they never own the buildings. The ownership reverts to the landowner either at the end of the tenancy, or at the end of any fixed period agreed between the landowner and the tenant.
	In the past, the agricultural buildings allowance has been the only form of return for tenant farmers constructing such buildings, apart from the benefit of the buildings. They have no capital asset to sell or let because they are not the owners of the land. The retrospective nature of clause 35 means that they will lose the ABA and have nothing. As the hon. Members for Stroud (Mr. Drew) and for Falmouth and Camborne (Julia Goldsworthy) said, the measure will hit all farmers, but it will hit tenant farmers who do not own the land on which a building is constructed especially hard.
	I appreciate the Chief Secretary's interest in my speech. I suspect that what I am saying is news to him and that he did not know about the agricultural holdings legislation. It would be a tremendous gesture if he were to agree that the approach in the Bill is not sensible, at least until he has talked to DEFRA officials about the impact that the measure will have on the 40 per cent. of farmers in this country who do not own their farms and rely on the ABA as the only way of getting back the capital that they have invested in a farm building that will never be theirs to dispose of, or to benefit from in any other way.
	I support the gist of the amendment. I hope that the Chief Secretary will think about the damage that the measure will do to an important sector of our agricultural industry.

Stewart Hosie: Hon. Members have made incredibly valid points. The hon. Member for Stroud (Mr. Drew) mentioned the dairy industry. We have heard about the situation facing tenant farmers who have no rights to their properties. We have also heard the key point that many structures covered by the allowance will depreciate in value from day one, even if a landowner has the rights to them. That point was glossed over in Committee. Hon. Members on both sides of the House have argued strongly that the matter should be considered again.
	I want to make a point about the industrial buildings allowance, as I did in Committee. The change to that allowance will have an impact on the tourist sector. When we had a brief debate in Committee about investment in hotels, the Chief Secretary rightly said that things are not the same as they were in 1978, which was when the allowance was first introduced. It is worth reiterating that in the light of a conversation that I have had since that debate.
	Things have changed since 1978 because the market for city breaks, long weekends and short breaks is now huge. There are places in the UK that were not tourist destinations even 10 years ago, let alone 20 or 30 years ago. Restaurateurs and hoteliers, especially, wish to invest in such areas so that they can provide the correct quality of offering to allow their businesses to compete in such a massive market. I raise that point because much of the tourism and hospitality sectors, as well as large parts of the farming sector, especially the dairy sector, are made up of businesses with incredibly low margins.
	In Committee, the Chief Secretary cited alternative allowances that will be made available, especially for the tourism sector. I discussed that with friends in the hospitality sector, including an ambitious hotelier who is determined to drive up the quality of his establishment so that it becomes a destination for the city-break market. He requires IBA to assist him to invest, given that margins are tight and the costs are high. When I told him about the other allowances that might be available to help him to deliver what he wants for his business and the area, he just laughed. The new allowances go no way towards taking the place of the IBA to assist the kind of projects that such ambitious hoteliers and business men wish to put in place.
	I hope that the Chief Secretary takes on board all the comments made during the debate, especially about the removal of the IBA from those in the tourism sector. The measure will have an impact on my constituency. The removal of the ABA will have an especially large impact on the dairy sector. As we know, that sector has been absolutely hammered due to the squeezing of margins. I am sure that the constituent of the hon. Member for Stroud thought long and hard about making his investment. I hope that his business manages to survive and that the Government will consider how to deal with the situation, whether through grandfather rights for existing investments, or a more fundamental rethink about changes to the IBA and ABA.

Mark Hoban: I do not wish to go over all the ground of tonight's debate and the quite extensive debate in Committee. The comments by my hon. Friends the Members for South-East Cambridgeshire (Mr. Paice) and for Hexham (Mr. Atkinson) and the hon. Member for Stroud (Mr. Drew) demonstrate the importance of Report stage on the Floor of the House, during which people with constituency experience can make powerful points on the impact on their constituents of changes announced in the Budget.
	No one can argue that the system of capital allowances can remain unchanged for ever. When my hon. Friend the Member for Tatton (Mr. Osborne) announced before the Budget our plans to cut corporation by 3p, he said that some reform of the system was needed. However, I believe that where significant changes are made, there should be proper consultation with the people who are most closely affected. The reliefs that we have been discussing are valuable; the Red Book indicates that the saving to the Treasury from the 1p reduction in IBAs and ABAs in the 2008-09 financial year will amount to approximately £250 million. Only 13 per cent. of property qualifies for the two reliefs, so the benefit is concentrated on relatively small but important sectors of the economy. When such a significant change is made, it is important to consult, so that Ministers can understand the consequences more clearly.
	In Committee, the Chief Secretary did not give me the impression that the changes had been fully thought through. Now that we are moving to a period of more open and consultative government, perhaps the Treasury should start thinking more carefully about such matters. In Committee, the right hon. Gentleman said:
	"it is not customary to consult on changes in rates of taxation or on the reduction or removal of tax reliefs." ——[Official Report, Finance Public Bill Committee, 22 May 2007; c. 292.]
	In fact, the Government had launched a consultation on the future of corporation tax. In its representations on the changes, the British Property Federation referred to the consultation document on capital allowances that had been published, and to the conclusions of that process. The federation pointed out that
	"In fact, the consultation actually highlighted the lack of tax relief for most taxpayers' expenditure on business premises which is regarded as putting the UK at a competitive disadvantage to its competitors."
	The BPF also said that the other point that emerged from that consultation was that
	"There was general support for a commercial buildings allowance, incorporating the current Industrial, Hotel and Agricultural Buildings Allowances."
	During the consultation that took place only a couple of years ago, strong support was expressed for the existing system of allowances. Given that support, it is even more important that the Government should have consulted properly, instead of rushing to cobble together a package in response to my hon. Friend the shadow Chancellor's proposal of a cut in corporation tax.

Stephen Timms: Let me start by outlining the purpose of clause 35 and how it fits into the wider package of business tax reforms in this year's Budget. The main feature of the package is the forthcoming reduction in the main rate of corporation tax from 30 to 28 per cent., giving the UK the lowest rate of corporation tax in the G7. The package of reforms to the business tax system represents the most comprehensive for more than two decades, and it has three main objectives. The first is to maintain and strengthen the UK's internationally competitive position. The second is to encourage further growth in the UK economy through higher levels of investment, more efficient markets, and greater innovation. The third is to deliver a fairer result for the UK taxpayer, and a more efficient use of Exchequer resources.
	I am grateful to the hon. Member for Falmouth and Camborne (Julia Goldsworthy) for quoting, I think correctly, what the Institute of Chartered Accountants said about the measures being a balanced package. She also raised a number of concerns, which were repeated by other contributors to the debate, and I shall deal with them in turn. First, she asked about consultation. I want to emphasise that the allowances are not being withdrawn without prior warning, or without our giving people time to plan for the changes. The rate of writing-down allowances remains unchanged for this year, and it will be gradually reduced between 2008 and 2011.
	The hon. Member for Fareham (Mr. Hoban) quoted me accurately on customary practice with regard to such changes: it is not customary to consult about changes in rates of taxation, or the reduction or removal of tax reliefs. There was consultation on corporation tax reform between 2002 and 2005, and that consultation explicitly recognised that limiting allowances to certain types of buildings, as currently happens, is a specific distortion affecting investment in property. The idea of a general commercial buildings allowance was mooted, but in all frankness I say to the hon. Gentleman that that would be prohibitively expensive. I am not sure whether he was arguing for such an allowance, but if every new building in the City, or in Canary Wharf, attracted a buildings allowance, even though buildings of that kind never have done so before, it would be hugely costly. One can understand why the property industry would favour a move of that kind, but it would be prohibitively expensive.
	If one accepts the argument that it is a distortion for allowances to apply to some buildings and not others, the logical approach is to do what we have done, and to move, in a well managed and phased way, towards abolition. That is particularly the case given that most commercial and industrial property, and the land on which it stands, appreciates rather than depreciates in value, although we have heard about some exceptions. I think it is right to draw the conclusion that we drew: other reforms would be more beneficial to the UK economy than a commercial buildings allowance.
	On manufacturing, I say to the hon. Member for Falmouth and Camborne that industrial buildings allowances account for only about 4 per cent. of the total capital allowances received by manufacturing, so I do not expect the withdrawal of the allowances to have widespread effects on the sector. Since the announcements, I have met representatives of the Engineering Employers Federation, who told me about the high degree of confidence in the manufacturing sector. Only about a third of all industrial buildings allowances are claimed by manufacturers, and on the whole those claims tend to be fairly small and are spread among a wider population. Of course, the cut in the main rate of corporation tax will stimulate domestic and foreign investment, and overall our analysis shows that there is a positive revenue impact on large manufacturers.
	To pick up the question asked by the hon. Member for Fareham, a lot of careful analysis has gone into the judgments that lie behind the announcements in the Budget. The package is designed to promote investment and growth. Manufacturing firms which invest will continue to benefit from the new arrangements. The issue of small manufacturers was rightly raised separately, but they will be among the main beneficiaries of the new £50,000 annual investment allowances. The increases in research and development tax credits for small and medium-sized enterprises, as well as for large companies, will also bring significant benefits for manufacturing.
	The hon. Member for Dundee, East (Stewart Hosie) asked about hotels. We also had an exchange on the subject in Committee. He is right that it was in 1978 that the industrial buildings allowances regime was extended to qualifying hotels, in order to assist with the growth of UK tourism. I say to him today, as I did in Committee, that the position is now very different. It is difficult to claim that the situation for the tourism sector is such that exceptional allowances are required to support it. The sector is doing well and growth is strong, and I am delighted about that, but I really do not think that there is the case today that there was then for extending particular allowances to hotels.

Stephen Timms: The hon. Gentleman may well be correct that it is right that there should be geographically targeted regeneration help, not just in the hotel market but in other sectors, to assist the regeneration that all of us want. However, I suggest that there is no case for a generalised allowance for the tourism sector, although there was 30 years ago. In general, the sector enjoys high levels of profitability. The sector as a whole will derive significant benefits from the 2 per cent. cut in the headline rate of corporation tax. As I said to him in Committee, for smaller hoteliers, the annual investment allowance of £50,000 will be a significant incentive for investment.
	My hon. Friend the Member for Stroud (Mr. Drew) and the hon. Members for Falmouth and Camborne, for South-East Cambridgeshire (Mr. Paice), and for Hexham (Mr. Atkinson) raised issues concerning agriculture. I say to them that the withdrawal of allowances is not an isolated measure. In the Budget, we announced cuts in the basic rate of income tax and the main rate of corporation tax. We also announced the new annual investment allowance, which is particularly important for small farmers. It is an allowance of £50,000 for business investment from 2008; that will be extremely helpful. It is possible that farmers who continue to invest will find that once the annual investment allowance is in place they will be better off as a result of the package as a whole, rather than worse off.

Stephen Timms: Clause 70 is one of two clauses in this year's Finance Bill that we have introduced to tackle stamp duty land tax avoidance schemes. This clause counters two types of scheme: those using leaseholds and those using sub-sales that have been specifically developed to avoid payment of stamp duty land tax. Clause 71 addresses another kind of avoidance. The two schemes that clause 70 tackles have sought to avoid payment of stamp duty land tax by adding often complex additional stages into the sale of a property in such a way as to remove the need to pay tax on the transaction.
	When we debated this clause in Committee, concerns were expressed that it could affect those engaged in innocent transactions rather than those involved in deliberately seeking to avoid payment of tax. I explained in that debate how we intended to protect innocent taxpayers, and how we had listened to the representations made to us about the measure. I also pointed out how we had shown that we were willing to change the clause in order to protect those involved in innocent transactions. I hope that I also demonstrated how we would operate the provisions fairly—for example, by ensuring that retrospective taxation powers would be used only if they favoured the taxpayer. The hon. Member for Chipping Barnet (Mrs. Villiers) was right to say that the amendment would remove one of the very safeguards that we have included in order to protect innocent taxpayers who might unintentionally be caught by the clause.
	I shall confine my remaining remarks to the amendment, other than to say in response to the hon. Member for Chipping Barnet that we have tried to ensure that the scope of the clause is limited, so that it covers only the specific avoidance methods that we wish to prevent. We have acted on representations that we have received, and our amendments will help legitimate transactions. In drafting the clauses, we became aware that if they were too specific, they might allow some avoidance schemes to continue without challenge. We have therefore included proposed new subsection (11) so that transactions inadvertently caught can be excluded. That is a helpful move.
	The amendment seeks to delete some lines in clause 70 that will allow the Treasury to disapply the main provisions of the clause—proposed new section 75A—in specified circumstances. We had hoped that this proviso would rarely, if ever, have to be used by the Government, but we need it in case the need arises. If the amendment were accepted, HM Revenue and Customs would have no option but to tell a taxpayer in such circumstances, "I am very sorry, but although we know you weren't trying to avoid paying us stamp duty land tax, what you have done has inadvertently triggered our anti-avoidance provisions and unfortunately you have to pay us tax as prescribed by this provision." That would be unfortunate. That is the reason why the clause reads as it does.
	The hon. Member for Chipping Barnet referred in Committee to a famous comment which she attributed to Lord Upjohn, although I am advised that it was actually Mr. Justice Walton who uttered the remark that
	"a taxpayer should be taxed by law, not untaxed by concession".
	I see the sense in that comment, but in circumstances such as those I described an innocent taxpayer might have to pay tax in situations that we did not expect when we drafted the legislation. I suspect that a reference to the words of Mr. Justice Walton, or indeed Lord Upjohn, would probably not satisfy someone who found themselves in that position.
	Finally, I welcome the concern of the hon. Member for Falmouth and Camborne (Julia Goldsworthy) to deal with avoidance. She is perfectly right to make the point that we need to be vigilant, as new avoidance mechanisms may arise. However, we have demonstrated in the changes we made in previous legislation to end relief on seeding trusts that we are prepared to act to prevent tax avoidance when we become aware of it. We have done so again in the Bill.
	The hon. Lady asked about special purpose vehicles and residential properties. At present, only a small number of properties are affected, but I confirm that we will keep the matter under review. Once again, we shall not hesitate to act robustly if the legislation on stamp duty land tax is abused. Given that reassurance, I hope that the hon. Lady will, as she indicated, not press the amendment to a vote.

Theresa Villiers: Throughout the debate on schedule 3 and managed service companies, the Opposition have recognised that there is an avoidance problem at the borderline between the employed and the self-employed, and that not all workers currently operating through managed service companies are genuinely in business in their own account. We would support measures to tackle that problem, but only if they were clearly drafted and appropriately targeted. Schedule 3 complies with neither of those two conditions, which is why we tabled amendments both in Committee and on Report to try to remedy the problems.
	Anne Swain of the Association of Technology Staffing Companies has told me of her concerns about the
	"huge amount of uncertainty around these provisions."
	The uncertainty around schedule 3 is costing people their jobs and their livelihoods. There is a real danger that innocent parties—contractors who are clearly in business on their own account—will be hit by collateral damage simply because they choose to outsource aspects of the management of the companies through which they provide their services.
	After the IR35 debacle and the millions spent on compliance checking, many in the contractor community feel victimised by this Chancellor. They resent the fact that the legislation will make it more difficult to use advisers who specialise in the contractor market. They also find it hard to understand why restrictions are being placed on their ability to outsource matters relating to their company, but larger businesses face no such constraints.
	Before addressing the amendments directly, I should make it clear that I welcome the Financial Secretary's clarification in Committee of a number of points relating to how the legislation should be interpreted. I shall refer to a number of his statements during the debate. The Opposition seek to persuade the House, however, that amendments are still necessary. Welcome though the Financial Secretary's words of comfort in Committee were, and welcome though HMRC guidance will be, the protection of a change in the statute will still be needed to remedy the problems with the drafting of schedule 3.
	It is possible to use  Hansard in interpreting legislation, but only in limited circumstances. In Pepper  v. Hart, the House of Lords restricted that to instances in which the relevant statute was
	"ambiguous or obscure, or leads to an absurdity".
	Nor can HMRC guidance provide an adequate answer to the problems in relation to the legislation. Certainly, it is useful, and it is regrettable that it has yet to be published, despite the fact that the regime has been in operation since April. One cannot, however, realistically expect thousands of contractors potentially affected by the legislation to check HMRC's website and keep track of guidance, as with the problems to which I referred in relation to clause 70.
	Moreover, guidance cannot be relied on in court and can be changed or withdrawn at any time. In a number of examples, HMRC indicated in guidance that legislation did or did not apply in a certain way, and then changed its mind and sought to use it in exactly the way that it said that it would not: for example, in Bibby  v. Prudential Assurance, and in Sema Group Pension Scheme Trustees  v. Commissioners of Inland Revenue. In both cases, HMRC had given a clear indication of how it expected the legislation to work in guidance, and then sought to go back on that.
	Relying purely on guidance would also contravene the principle in the House of Lords decision in Wilkinson, and the constitutional principles to which I drew the House's attention during the debate on stamp duty. HMRC's controversial record on the enforcement of IR35, and the numerous cases in which an allegation of failure to comply with IR35 has been made and later dropped, show the risks of leaving tax inspectors with too much discretion. Relying wholly on guidance rather than making sure that the legislation is clear would give tax inspectors too much discretion.
	On amendments Nos. 8 to 10, schedule 3 means that any freelancer must ask the key question whether his professional advisers could fall into the category of an MSC provider, which would change his tax status from that of a service business to that of an employee. The definition of an MSC provider is contained in paragraph (d) of proposed new section 61B in schedule 3, and covers any
	"person who carries on a business of promoting or facilitating the use of companies to provide the services of individuals".
	As many professional bodies have repeatedly pointed out, that is exactly what many accountants do. They will frequently advise their clients as to the best corporate structure to use, establish companies for them and go on to provide company secretarial services and process payments relating to those companies. Similar issues arise for company formation agents and other professionals providing company secretarial services.
	It is true that the Financial Secretary gave some comfort on that point in Committee, stating that even when the specific exclusion for professionals in subsection (3) does not apply,
	"the purpose of the legislation is not to include within the definition of MSC provider accountants, tax advisers, lawyers and company secretaries who provide advice or other professional services to companies in general. Those persons are not in the business of promoting or facilitating the use of companies to provide the services of individuals, nor are they regarded as involved with the company in the way in which the legislation envisages." ——[Official Report, Finance Public Bill Committee, 15 May 2007; c.175-6. ]
	That is a welcome clarification, but as Professor Anne Redston of King's college London has pointed out:
	"the worry is that this is not what the legislation actually says".
	There is no exclusion for those who facilitate the use of companies to provide the services of individuals only in the course of providing services to companies generally. Indeed, it would be quite difficult to draft such a provision without leaving loopholes. It seems to me that looking at the drafting of paragraph (d), the mere provision of services to a range of different companies, some of which happen to be used for the provision of services of individuals, would be enough to bring the adviser within the scope of the legislation, whether the Financial Secretary says so in Committee or not.
	Amendment No. 8 would remove the threat from accountants and other professionals who carry out such activities as part of a wider practice of accountancy and business advice. Amendment No. 9 would ensure that only those who had a close day-to-day involvement with the running of the service company and a wide range of its activities would trigger the MSC provisions.
	The two amendments would focus the legislation on the sort of situations in which the provider and not the worker is in the driving seat—where the company is essentially an emanation of the provider rather than a separate entity run by the worker. The effect would be to target the MSC provisions at the people the Government seem to have in mind—those for whom the provision and facilitation of service companies is a core and discernable part of their business.
	The amendments are revised versions of those tabled in Committee. Amendment No. 10 has been added in response to the concern expressed by the Financial Secretary in Committee that an MSC provider could combine its business with other services to avoid being caught by the legislation. I hope that the changes would ensure that the provider cannot use the cover of linked services provided by associates to avoid measures in the legislation. The amendments are tighter than those rejected in Committee.
	Amendments Nos. 10, 11, 12 and 13 address similar concerns, but they can stand alone and should be considered independently by the Financial Secretary. They address the serious problems with proposed new section 61B(2), which provides that if a third party influences the service company, it is sufficient to amount to involvement and to trigger the MSC provisions.
	Taking a commonsense interpretation, every professional adviser could be said to influence their client. There is no point in engaging professionals unless the intention is at least to consider acting on their advice. Why would people pay their fees if they are not interested in being influenced by their advice? Again, some welcome comfort can be drawn from the Financial Secretary's comments in Committee:
	"I think that hon. Members would accept that there is a difference—between a person who provides independent, tailored advice to a client, who is then able to consider that advice before accepting it or rejecting it, and the person who simply supplies a client with a standard solution or product that the client accepts. It is not the intention that the former situation—the provision of advice—be considered to be influencing in this context. However, the latter situation— supplying a standard solution or product—is regarded as influencing." ——[Official Report, Finance Public Bill Committee, 15 May 2007; c. 175.]
	There are two reasons why amendments are still needed despite those assurances.
	The first concerns the practical difficulties. They are outlined by Institute of Chartered Accountants:
	"We are concerned that the definition of 'involved', as explained by the Financial Secretary...is difficult to apply in practice. This relies upon the client of the MSC Provider receiving advice rather than a 'solution' which the client accepts without fully understanding the consequences. This may be determinable if HMRC were present at the conversation with the client but there will be little evidence that can distinguish between the two situations after the event."
	Any accountant, particularly one specialises in a particular area, may offer a fairly standardised package to a significant number of clients if they have similar requirements. After the event, it may be difficult to determine whether individual tailored advice has been given but the similarities between the customers has resulted in the same arrangements being made, or whether a standardised solution has been provided into which the adviser has pushed the customer.
	The second and more serious problem with relying on the Financial Secretary's statement is the same as before: it is simply not consistent with what the legislation actually says. The explanatory notes say that "influences" should bear its normal meaning. The OED defines "influences" as "to affect the condition of" or "to have an effect on". The Minister's interpretation of "influence" as involving essentially a take it or leave it situation in which the client has little say over the nature of the structure or how it operates is a gloss on the statute and is at odds with the common-sense interpretation of the word.
	Amendments Nos. 11 to 13 seek to take what the Minister has said and insert it into the legislation, so that the provision of a standardised service will trigger the MSC provisions but not a bespoke one. While not ideal, such an approach would at least reduce the risk that contractors who use accountants will inadvertently bring their service companies within the MSC provisions.
	Another important reason to amend subsections (1) or (2) or both is that the safe harbour proposed in subsection (3) for those who provide only
	"legal or accountancy services in a professional capacity"
	gives inadequate protection to advisers and their contractor clients. There are of course several concerns about what is included in the term "legal or accountancy services" which were aired in Committee. However, a further worry is revealed when one examines what the explanatory notes have to say about the words "in a professional capacity", which is that
	"professionally qualified persons normally would not be considered to be an MSC provider except to the extent that they are in the business of promoting and facilitating the use of companies to provide the services of individuals."
	So in looking at the meaning of subsection (3) one is simply thrown back on to subsection (1). It seems that subsection (3) will be of limited use unless the problems with subsection (1) that I have outlined are resolved.
	If the Minister will not accept the amendments to subsections (1) and (2), I hope that he will at least address the questions that I put to him in Committee, which he was unable to answer then, about the scope of the safe harbour for professional services.
	First, is it the nature of the services provided that determines whether someone is an MSC provider, or is the question determined by the qualification or the professional status of the person providing the service? Is it possible for anyone who is not part of a regulated profession to use the subsection (3) safe harbour? Do people need a current practising certificate to use it? What about accountants and other tax professionals, who are not registered, but who are employed in-house? And to what extent can service providers outside the remit of the traditional professional set-up use the safe harbour?
	In the past, I understand that the Government have always been resistant to attempts to control or regulate the term "accountant" on the grounds that that could be anti-competitive. It certainly restricts competition if the outcome of the legislation is that freelancers and contractors can no longer outsource accountancy services to specialist providers and forces them to use only traditional accountancy practices. There is at least a risk that differentiating tax treatment on the basis of whether one holds a qualification from a professional body might be either anti-competitive or breach EU discrimination law.
	This debate also gives the Minister an opportunity to address some of the other questions that he did not answer in Committee about different service providers and how they are dealt with by subsections (1), (2) and (3), including in particular franchise advisers; factoring and invoice discounting houses, which help to follow up unpaid invoices; and back-office companies which provide services relating to payroll, supplier payments and so on. Those firms provide some of the very services the legislation uses to identify MSC providers. For example, they often pay the worker's tax and trade creditors. Is it the intention to turn all the clients of back-office service companies into MSCs even when the workers in question are clearly in business on their own account?
	I turn now to the second limb of the Government's proposals on MSCs, which is the third party debt rules contained in proposed new section 688A. Those are far reaching and leave professional advisers potentially on risk for thousands of pounds of their clients' taxes, even if they have no avoidance motivation and their involvement with the MSC is inferential or unwitting. Section 688A could leave accountants and other advisers up and down the country liable to the last penny of their personal wealth. In making directors liable, the rules are much more powerful than the normal circumstances where such people are liable for the debts of their companies, never mind the tax debts of people with whom their companies might be loosely connected.
	Even a lowly payroll clerk working for a scheme provider could be bankrupted should the Revenue proceed against him or her as someone "actively involved" in the provision of services via an MSC within subsection (2)(c) of section 688A. The Financial Secretary said in Committee that he did not intend ordinary employees of either MSCs or relevant third parties to be caught. However, whether he likes it or not, they are in scope and so their protection will be the tenuous one of a few words in  Hansard and the discretion of Her Majesty's Revenue and Customs.
	That degree of discretion is a hugely powerful tool in the hands of the Revenue. Serving notice, for example, on a company's employees that they are in danger of having to pay out thousands of pounds in tax debts for their employers' clients could have a startling effect. It could certainly force the employer to pay up to the Revenue in double-quick time, regardless of whether the demand for payment was justified.
	"So much the better," the Minister might respond, but there, I think, we have the truth of it. It seems to me that these provisions have been drafted in a deliberately wide-ranging and ambiguous way in order to scare people away from a particular type of service provision, regardless of whether a tax avoidance motive is involved or not.
	To use tax legislation to deter and punish in this way raises some significant constitutional concerns. That is not what the tax system is supposed to be used for, and this is no victimless constitutional question. Already, some contractors are finding their work drying up because third parties are afraid to engage them for fear of falling foul of the third party debt rules.
	Many of the concerns about section 688A flow from the fact that paragraph (c) of subsection (2) provides that any party who "encourages" the provision of the services of a worker by an MSC could become liable for the tax due on the deemed employment payment imposed by the legislation. That is why we have tabled amendment No. 15 to delete "encourage" from paragraph (c). This probing amendment is designed to elicit some clarity for the many businesses potentially affected by the MSC legislation and deeply worried about whether their day-to-day activities might be viewed as "encouraging" within the meaning of paragraph (c).
	For example, by providing companies to be used by contractors an accountant or company formation agent could be said to have encouraged the provision of the services via MSCs. Any accountant who provides advice on the appropriate corporate structure could also, as a matter of logic, be said to be encouraging the use of that structure and hence the provision of services by the MSC. If accountants advertise or promote corporate services to contractors, that surely would amount to encouraging people to use these services. If the legislation were targeted on those who encouraged individuals to use MSCs, one could perhaps see the logic, as that would more accurately focus section 688A on those actively pushing workers into MSCs.
	I think that they are the people whom the Government want to target, but that is not what section 688A says, as it refers only to encouraging the provision of the services by the MSC. So as long as a person encourages the company to provide the services, it seems to me that that person is at risk of being caught by section 688A, regardless of whether he or she knew that the company was an MSC.
	Arguably, that means end-clients may find themselves liable for the tax debts of the contractors and freelance workers whom they engage. Surely by paying a company to provide services, an end-client is encouraging that company to provide them. What clearer example of encouragement could there be than direct financial inducement? Equally, a worker who finds other contractors to take part in a project could be said to be encouraging the provision of services by those companies.
	A further anxiety surrounding the term "encourage" is that it could prevent recruitment businesses from holding an approved list of company suppliers and advisers. Any recommendation or advice regarding a company supplier given to a worker could constitute "encouraging", and the Financial Secretary confirmed in Committee that holding such a list could give rise to problems under the legislation—contrary to the indications given by HMRC on that point. The unfortunate effect of that would be to remove a useful compliance check that at present serves to steer contractors away from dubious operators in the market.
	Many of the problems surrounding the concept of "encouraging" fall away if we could insert a requirement of culpability, and that brings me to amendment No. 16. As I have said, these are very powerful provisions and there are very important arguments in favour of restricting those caught by them to people who bear a degree of blame for, or at least had an idea of, what was going on.
	In particular, it is critical to remove the risk that I have highlighted—that end-clients could be liable for the tax debts of their contractors—since that risk could have a seriously damaging impact on the flexibility of the UK labour market. The Government seem to think that the use of the term "actively facilitate" imports an element of deliberation or culpability, but that is simply not clear. A person could be actively involved, on a daily basis, with the provision of services but not know much about the corporate structure through which they were provided. As long as someone was actively involved with the provision of services by the company, they could be caught even if they had no knowledge that the company was an MSC or was being used to avoid tax.
	Amendment No. 13 would remedy that situation by ensuring that section 688A catches only those who knew, or could reasonably be expected to know, that the company through which the services in question were being provided was an MSC. In Committee, the Minister was unable to explain why he resisted the amendment despite the fact that the Treasury's own consultation document on the provisions indicates that that is exactly how HMRC believes that section 688A will apply in practice.
	That was confirmed in a letter to me from the Financial Secretary, dated 10 May this year. He stated:
	"Our clear objective is that those who don't know or could not reasonably be expected to know that they are dealing with an MSC should not be within scope of the debt transfer provision".
	How does he reconcile that statement with his statement in Committee, when he rejected a defence based on ignorance? By doing that he in effect accepted that it is possible for unwitting third parties to be caught by the third party debt rules. Nor did he explain in Committee why such provisions are acceptable in other areas of legislation, such as the Insolvency Act 1986, but not in this context, where they could do so much to clarify the legislation and reassure people who are connected with freelancers and contractors.
	Turning to amendment No. 14, the Financial Secretary has taken steps to remove almost all reference to "HMRC thinks" in the Bill. The amendment would see the back of "HMRC considers", which suffers from the same defects. Either a tax debt is due or it is not. What HMRC considers to be the case should not be relevant. What should count is whether the situation falls within the scope of the legislation. If we were to grant HMRC the power to levy taxes when it considered them to be due, that would give it far too much discretion and would undermine yet again the principle that it is for Parliament, not the Executive, to determine whether citizens should be taxed. If the Minister is prepared to junk "HMRC thinks", why does he continue to inflict "HMRC considers" on the public?
	Amendment No. 17 is designed to prevent local tax inspectors from using section 688A as a shortcut to collect taxes from third parties simply because it is easier than pursuing the taxpayer directly. I have received a number of representations on this point. The Professional Contractors Group is understandably anxious, given the unhappy experience that many of its members have had with HMRC's heavy-handed approach to IR35. It says:
	"PCG feels uncomfortable with the prospect of HMRC being able to 'pick low-hanging fruit' by transferring debts to an easier target if the first transferee seems unlikely to pay."
	Amendment No. 17 would limit HMRC's discretion in this area and essentially require it to adopt the sequence set out in section 688A(2) in pursuing the different parties. Given the powerful nature of the new power to impose a liability to pay other people's tax debts, it would give huge comfort to know that constraints are in place to require HMRC to pursue the real offenders first, before coming after those whose involvement was inferential and unwitting.
	In conclusion, contract working is of key importance to thousands of workers, who value the freedom and flexibility it gives them. I am sure that Treasury Front-Bench Members would agree that it is also critical when competing in a global world economy. The reality is that many hard-working, law-abiding contractors could be hit by the legislation even when they are not dodging taxes or misrepresenting the nature of their relationship with their end clients. It is also clear that the cost of the professional advice that they need could be driven up by the flaws in the legislation and that the uncertainties generated by the Bill could significantly undermine the flexibility of the UK Labour market, about which the Chancellor has frequently boasted.
	Above all, the legislation will provide yet another set of complex tax hurdles for small start-up businesses to try to jump over. We should remember that today's one-man service company could easily become tomorrow's Apple, Amazon or Google. If we smother these enterprises at birth, the only people who will gain will be the entrepreneurs of China and India, who are already anxious to move in on our service industries. I urge the House and the Minister to take this final opportunity to grapple with the flaws in the legislation and to deflect the blow that is about to land on so many small services businesses across the nation.

Stewart Hosie: I thank the hon. Member for Chipping Barnet (Mrs. Villiers) for going through the amendments in considerable detail. I know that it is late and we have been through this debate in Committee, but it is important because of the potential scale of the impact of the measure.
	I share the concerns voiced by many people, including the hon. Member for Wolverhampton, South-West (Rob Marris), that some companies, particularly legitimate recruitment and accounting services companies, as well as other back office firms, may be defined as managed service companies when they are not. I shall go through the definition of an MSC, but first I shall talk about the amendments.
	Amendment No. 8 would amend the description of an MSC by tightening the criterion in proposed new section 61B(1)(d) of the Income Tax (Earnings and Pensions) Act 2003, changing the wording from
	"a person who carries on a business of promoting or facilitating"
	to a person
	"whose sole or main business...is the provision or facilitation of"
	MSC services. That is a useful safeguard to avoid the legitimate back office-type of operation being deemed to be an MSC merely by association. It would also offer some comfort to legitimate recruitment firms, which may be deemed to be MSCs by association with genuine MSCs, because they present as a candidate for a legitimate contract job someone who may not even know their own employment status but who may have been used by an MSC—a real one—that was no more than a gangmaster operation.
	Amendment No. 9 would leave out "involved with the company" and tighten the provisions by including the words
	"regularly involved...with all or most aspects of running the company on an ongoing basis".
	That change offers real protection to companies that place people from an MSC who are presented as bona fide contract workers, but who, as I have said, may not even know their own employment status. That is an extremely important protection.
	Amendment No. 11 would leave out "influences or" from proposed new section 61B(2)(b), and would require control to be the criterion that determines whether an MSC provider is involved with the company. Amendment No. 13 would specify in proposed new clause 61B(2)(c) that the company must be required to exert
	"a substantial degree of influence over the provision of...services".
	Amendments Nos. 11 and 13 are necessary to protect third-party companies that are not MSCs from being defined as such; that is particularly important for recruitment firms or accounting companies that facilitate contract employment. By that I mean a recruitment firm that offers any other services—even advice on the nature of payment, on how to invoice or on which contract to take—or an accounting services company with a recruitment arm that assists in the final negotiation of a contract once the contract is put forward by a recruitment firm.
	It is easy to see that a third-party firm could be defined as an MSC without that protection. The description of an MSC in proposed new section 61B(1)(a), (b), (c) and (d) is clear. Paragraph (a) says:
	"its business consists wholly or mainly of providing (directly or indirectly) the services of an individual to other persons".
	A recruitment firm would come under that, and an accounting services company might do so if it had any input into the negotiation of a contract. Paragraph (b) says:
	"payments are made (directly or indirectly) to the individual...of an amount equal to the greater part or all of the consideration for the provision of the services".
	That concerns payment. Paragraph (c) says that a company is an MSC if the way in which the payments are made would result in the individual receiving more than they would if they were a normally employed member of staff, but that is the reason why many people become self-employed contractors; they take a risk and go it themselves, but there are tax advantages, and the income received may be slightly greater. Paragraph (d) mentions
	"a person who carries on a business of promoting or facilitating the use of companies to provide the services of individuals".
	That is the whole purpose of a recruitment firm. The paragraph would possibly catch an accounting services company with a recruitment arm, too.
	Of course there are some protections, but I do not believe that they are sufficient. That is why I will support the amendments tonight. A protection is offered in proposed new section 61B(4), which says that the only time when a person does not fall within subsection (1)(d)—that is the description of an MSC—is when they only place individuals with persons who wish to obtain their services. As a recruitment firm may well provide assistance with visas for an overseas contract, or specialist training for an offshore contract, or accommodation for a contract in a strange place, they are not only placing individuals; they are doing other things, too, so the protection in new section 61B(4) does not necessarily apply, as subsection (5) allows an opt-out.
	Subsection (5)(a) excludes the protection in subsection (4) if the person or associate does anything in subsection (2)(c)—that is, anything that
	"influences or controls the way in which payments to the individual...are made".
	If a recruitment firm or an accounting services company suggests that the individual contractor invoices weekly, fortnightly, monthly, or three-monthly, according to what suits the contractor, that influences the way in which payments to the individual are made, and therefore the protection in proposed new section 61B(4) does not apply.
	Reference has been made to the safe harbour in subsection (3), which says:
	"A person does not fall within subsection (1)(d) merely by virtue of providing legal or accountancy services in a professional capacity."
	At face value that sounds fine, but if the firm, particularly in an accounting services company context, has a recruitment or personnel arm that offers advice on visas, training or accommodation, or that assists in any way with the final negotiation of a contract, that safe harbour would not apply.
	As the hon. Member for Chipping Barnet (Mrs. Villiers) said, the Minister gave the Committee certain assurances, and it will be useful to hear what he has to say today. The volume and detail of representations, however, in the real world outside the Chamber are such that he may wish to toughen up what he is going to say or, indeed, tell us that he is prepared to reconsider the Bill's provisions so that we do not have to rely on guidelines and regulations in future.

John Healey: Thank you, Mr. Speaker. I would hate to miss the opportunity to respond to the debate.
	The hon. Member for Dundee, East (Stewart Hosie) is right that we have been through this in some detail more than once. He is right, too, that it is an important matter, as hon. Members have emphasised. The hon. Member for Chipping Barnet (Mrs. Villiers) recognises—and I am glad that she did so so clearly—the need to tackle the avoidance that undoubtedly results from the existence of MSCs. She supports our proposals on two conditions: the provisions should be clearly drafted and appropriately targeted. I hope that I can give her that reassurance tonight, as I have tried to do in previous debates on the Bill. I hope that that reassurance will help the hon. Member for South-East Cornwall (Mr. Breed), too, as well as my hon. Friend the Member for Wolverhampton, South-West (Rob Marris). I am glad of my hon. Friend's support in principle, as well as his recognition, which was shared by the hon. Member for South-East Cornwall, of the difficult need to balance provisions to catch those whom we want to catch against the need not to bring into the net those whom we do not want to catch or indeed, introduce provisions that will have perverse consequence.
	I shall try to deal with concerns about back-office companies that offer administrative services and, in so doing, tackle the question of exemption and whether or not provisions that have been in place for some time have had effect on employment. I shall then deal specifically with the amendments tabled by the hon. Member for Chipping Barnet so that, without delaying the House unduly, I can deal with hon. Members' concerns. The hon. Lady reiterated, as she has done consistently, understandable concerns about the position of freelancers. Freelancers who outsource any part of their administration are not, and should not be, in danger of being caught by the legislation, which is not intended to, nor does it, catch persons genuinely in business on their own account who receive help to run their company. The legislation catches those who have simply been provided with a company as a means to an end. In achieving that end, they need the company to be run for them.
	The legislation therefore does not prohibit small contractors from outsourcing the administration of their companies. They can obtain the support services that they need, but there is a distinct difference between someone who offers back-office services to client companies generally and someone who is in the business of promoting or facilitating the use of companies to provide the services of individuals who, as part of that business, offer support services. Of course, such people can operate through MSCs if they choose—that is not a problem, and we do not discourage it—but they will have to pay the proper employed levels of tax and national insurance.
	Let me try to make the point slightly differently so as to pick up a set of associated concerns. Simply because someone is not exempt by virtue of proposed new section 61B(3) does not mean that they are caught by the legislation—a point that I have made in previous debates. If that is to happen, someone must fulfil wholly the criterion of proposed new subsection (1)(d), which links directly to proposed new subsection (1)(B), too. They must first be in the business of promoting or facilitating the use of companies to provide individuals' services.
	HMRC will give careful consideration to requests to consider the application and qualification for exemption, but I stress that those providing corporate solutions to persons seeking to disguise employment use a wide variety of structures. Any examination should not provide scope for MSC providers to exempt themselves from the legislation.
	Let me tackle the question whether people are going out of business. It seems that some MSC providers are winding up or changing their businesses because there is no longer a tax and national insurance advantage from operating an MSC scheme. That reinforces the point that such schemes existed only to avoid tax and national insurance, and now that that has been stopped, they have no real reason to continue in business.

John Healey: The hon. Lady caught me in mid-sentence. Perhaps I should not have been so generous or ready to give way. I was going on to say that as she would expect, we have been watching carefully the impact of the legislation in the sectors that it might affect, and we have no evidence that it has had any adverse effects on employment. Our assessment to date is that the new rules have been operated by many providers since April with no apparent disruption to the labour market.
	I turn to the specifics of the amendments. Amendments Nos. 8 and 9, which deal with the definition of an MSC provider, would enable MSC providers determined to sidestep the definition to seek to run a dual business, of which the provider element comprised only 49 per cent. Hon. Members will see immediately that that is an obvious way of restructuring the business to sidestep rules if they were amended as proposed. For the same reason the term "sole" would provide even greater scope for circumvention. Far from tightening the definition, as hon. Members have argued, the amendment would loosen the scope for avoidance—the very problem that we are trying to deal with.
	On the tests for involvement with the MSC, amendments Nos. 11 to 13 seek to change these tests, creating tests which would be easy to circumvent. There is no reason why a person purportedly providing business services to a company through which a worker provides their services should seek to influence the way in which a client company provides the worker's services. I explained that clearly and on record in Committee.
	The question of influence, as I explained, is clearly distinct from independent tailored advice which is normally given by accountants and other advisers. Importantly—this is the proposition in the amendments—if the test were merely control, it is likely that many providers would take steps to ensure that their arrangements gave the impression that control lay with the company. Influence would be less easy to disguise.
	Amendment No. 13 would remove three of the five tests, and import terms such as "substantial degree of influence" in reference to a standardised product. The weakness with these amendments is that to prescribe involvement in this way would inevitably result in MSC providers claiming that their services did not fall within the detailed strategy description, creating significant risk to the aims of the legislation.
	Amendment No. 14 is presumably an attempt to remove the possibility of an officer of HMRC using his discretion to transfer an amount that in other situations would not be considered due. That is not necessary. A HMRC debt can arise only by virtue of one of the existing provisions in the PAYE legislation.
	On amendments Nos. 15 and 16, we have listened carefully to the concerns expressed about the scope of the debt transfer provisions. We have already made amendments to ensure that there is greater clarity and certainty about who is or is not involved. Amendment No. 15 would substantially undermine the effectiveness of the transfer of debt provision. The removal of the word "encouraged" would enable those third parties to continue to encourage workers into MSCs without themselves facing financial risk. Amendment No. 16 would open the door to abuse by allowing ignorance as a defence. Finally, amendment No. 17 contains detail that would be more appropriate in the guidance.
	In the Public Bill Committee, I indicated that the regulations relating to schedule 3 would be published by HMRC in draft and would be laid before the House once the Finance Bill has received Royal Assent. I also gave the undertaking that HMRC would informally consult interested parties to ensure that the guidance on the legislation provides the clarity that those groups seek. We have held detailed discussions with representatives and experts and are building many of their suggestions into the guidance. We anticipate that the guidance will be published next week, and I think that hon. Members accept that it will be entirely in keeping with the approach that we have taken since the first draft regulations and legislation were published alongside the pre-Budget report.
	We have improved the legislation and taken into account the views expressed at every stage of the process. I hope that I have reflected that tonight and provided the reassurance the hon. Members seek. The amendments are unnecessary or would jeopardise the intent of the clause.

Edward Balls: I think that I might move on and get back to the substance rather than "jokes"—I think that that is the word. I enjoyed that one very much.
	In response to representations received from the life insurance industry, amendment No. 20 restores a provision that was unintentionally deleted by the Finance Bill, which we therefore correct. Amendment No. 21 adjusts the regulatory powers in schedule 9 to provide the flexibility needed to deal with future representations from the insurance industry. At present, the regulatory power provided in paragraph 60 of schedule 9 applies only to transfer schemes taking place from the day to be appointed under paragraph 17, which is likely to be in spring next year.
	Not all the provisions in schedule 9 start from that appointed day. One such is proposed new section 444ABD, which starts from the Budget day. Discussions with the life insurance industry on the detail of the transfers of business legislation are continuing, and proposed new section 444ABD and other earlier starting provisions might need amending as a result. I do not know whether the hon. Member for Mid-Sussex (Mr. Soames) has views on that too; if he has, I would be happy to hear them. To give the flexibility to bring in agreed changes from the earliest possible date, Government amendment No. 21 amends the regulatory power. The regulations will be consulted on extensively and will be debated in this House, as they are subject to the affirmative procedure.
	Some concern has been expressed by the industry that bringing forward the date from which regulations can have effect should not be used to impose charges to tax retrospectively. It is not our intention to do that, and in any case a statement of compatibility with the Human Rights Act will have to be made in relation to the regulations.
	Amendments Nos. 22 to 29 amend the part of schedule 10 about structural assets. We had a substantial debate on the issue in Committee, which focused mainly on the complex issues of capital gains and the interaction with the tax law on life assurance companies as it affects structural assets. During that debate, the hon. Member for Fareham asked me some detailed questions, and I sent him an even more detailed written reply, which I hope cleared up his questions. Since that debate, we have consulted in further detail with the insurance industry on the issues that he and others raised, and have reached agreement about what is to be done. The amendments, particularly amendment No. 26, are the result.
	The other amendments to schedule 10 correct minor errors or make technical adjustments to improve definitions and to improve that section of the Bill overall. All the amendments improve the working of schedules 9 and 10, and the insurance industry is fully satisfied with them. On that basis, I commend them to the House.

Stephen Timms: No, I will not give way.
	The Bill rises to that challenge with targeted and economically efficient carbon saving measures—for example, to air passenger duty and vehicle excise duty. There are measures to reduce household carbon emissions as well, including incentives for energy efficiency in the current building stock and in new build.  [Interruption.]
	Clause 19 is particularly interesting. It will help to kick-start the market for zero carbon homes like those planned for Galleons Park, a development going forward in my constituency.
	Finally, on the environment, clause 16 implements—

Theresa Villiers: The Opposition will vote against the Bill tonight, because it is flawed in a number of fundamental respects. In particular, we will vote against it because it implements a Budget that was a tax con and not a tax cut. It provides a significant landmark, in that we will overtake India and have the longest national tax code in the world. Thanks to this Chancellor's tendency to micro-manage, tax law has mushroomed, which has increased costs for business and severely damaged our competitiveness in the globalised world economy.
	We remain opposed to the increase in tax rates for small businesses in clause 3. That increase comes on top of interest rate rises and falling living standards. It is an increase that many hard-pressed small businesses can ill afford. And many small enterprises will be hit with a double whammy, with the loss of industrial buildings and agricultural buildings allowance. That change was made without warning or consultation, and investment decisions taken as long as 24 years ago could be affected by that retroactive legislation.
	The MSC legislation inflicts another blow on many small businesses. In an era when we need to get better and better at high-tech, high-value industries, why does the Chancellor insist on kicking the contractor community yet again, when their work is pivotal in the IT sector?
	We welcome a number of the environmentally related provisions in the Bill, but we fail to see why Ministers cannot answer the basic question of how many zero carbon homes there are in this country. They have given us about four different answers, but still they cannot give us a conclusive one.
	We welcome the clauses on microgeneration, but it is a matter of regret that once again the Government rejected the request that they account to Parliament on the critical issue of microgeneration after we re-tabled the amendments to last year's Finance Bill tabled by the hon. Member for Nottingham, South (Alan Simpson).
	We have severe concerns about the drastic restrictions on sideways relief in schedule 4, which could have a hugely damaging impact on scientific research and the innovation that we need to fight climate change. Those restrictions will catch a huge number of innocent transactions. The Minister has said that he can solve the problems with guidance. For the reasons that we set out throughout the debate, one cannot draft excessively wide legislation and allow HMRC discretion to cut down its scope with guidance.  [ Interruption. ] Frankly, that contravenes the spirit underlying the 1688 Bill of Rights and the fundamental constitutional principle that it is for Parliament to determine taxation and not the Executive.  [ Interruption. ]
	The Bill's provisions on pensions continue to demonstrate the Chancellor's mismanagement of the tax system—

Theresa Villiers: Significant restrictions are being introduced on ASPs a matter of months after their introduction on A-day. There is little doubt that such instability is one of the main reasons for the collapse in the savings ratio since the Chancellor entered No. 11 Downing street. Small wonder that confidence in saving has sunk to such lows when the Chancellor not only raids pensions funds for billions of pounds every year but pulls the rug from under the feet of savers when they invest in products that his own legislation has been responsible for creating. It is a further blow to savings that the Government have this evening once again resisted our efforts to scrap the annuity rule, which causes so much anger among people who have made the effort to act responsibly and save for their old age.
	We have sought safeguards in relation to the significant powers of arrest and surveillance that the Bill extends to the combined HMRC organisation. Of course, we support the use of powerful tools in the fight against tax fraud, particularly organised crime and missing trader intra-Community fraud, but it is vital that such powers should not be used as leverage in ordinary day-to-day tax disputes. It would not be acceptable if someone was threatened with arrest if they made a mistake on their tax return. We are pleased that the Government have responded to concerns expressed about the concept of "HMRC thinks", which was almost universally condemned. It would be highly inappropriate to give HMRC the power to penalise taxpayers when it merely thinks that they have done something wrong.
	We continue to support the Government's efforts to crack down on MTIC fraud. We welcome the fact that they have now got their derogation from the European Union, but regret that the heavy price they paid was to give up all resistance on the loss of £7.2 billion of our rebate. In negotiating the derogation, it seems that the Treasury finally gave up the last semblance of resistance and handed over £7.2 billion more of our money to the EU.
	On the last full day of his term as Chancellor, this Finance Bill is typical of the 10 years that we have seen of him—not all bad, by any means, but defective in some very fundamental respects. The Bill creates further complexity and instability in our tax system, just as has every one of his other Finance Bills, to the detriment of our global competitiveness. It fails to provide effective measures to tackle climate change. It penalises small companies with higher taxes and more tax complexity, just as the Chancellor has done so many times in the past. It undermines confidence in pensions. Just as we see the Chancellor's 10 years in office ending with figures showing poverty and inequality increasing in Britain, the Bill does nothing to help those on low incomes, and the Budget actually shifts the burden of tax on to the poor and away from those on middle incomes. Above all, we decline to give the Bill a Third Reading because it implements a Budget that was characterised by the spin and the cynically, nakedly political motivation that has typified the Chancellor's years at No. 11—and will no doubt continue to characterise his years at No. 10.

Julia Goldsworthy: Another year, another Finance Bill. It has been a great shame not to see the Paymaster General here, although I have seen her in action in Westminster Hall and she seems to be very well. Perhaps she will be here next year, even though the current Chancellor will not.
	One of the issues that came up in last year's Finance Bill was the clear lack of consultation on significant changes to the taxation system, particularly in relation to the inheritance tax treatment of trusts. This year, that has raised its head again in some important respects. The Treasury has been ignoring the impact that some of its decisions will have on some very vulnerable groups. For example, this afternoon we discussed steps to abolish the industrial and agricultural buildings allowance. Again, there seems to be no understanding of the impact that these changes will have in rural areas, particularly on tenant farmers. We merely heard a restatement of the fact that the package was cost neutral overall.
	There is not simply a lack of consultation but a lack of openness and clarity. One need only look at the Chancellor's Budget announcements on personal taxation to see that key vulnerable groups are again being ignored. He announced, to paraphrase, that the basic rate of income tax would be cut by 2p next year to make the system fairer and reward work, but did not say that that cut would be paid for by abolishing the starting rate that he himself introduced, meaning that many low-paid workers would see their marginal rate of taxation double. At best, people would be no worse off if they claimed tax credits and other benefits, but those not entitled to those benefits, such as pensioners, the under-25s and couples without children, would lose out. That was not made clear. That was why the right hon. Member for Birkenhead (Mr. Field) said that we need to publish the impact of these decisions at the time when they are announced so that we have greater clarity and can hold the Government to account for their decisions. There are probably still people out there who do not know whether they will be better off as a result of the Chancellor's announcements. I still do not understand why Conservative Members showed timidity and failed to support a provision that would provide much greater clarity. It was a good principle, which, instead of being rejected, should have been applied to the impact of the business taxation package in the Bill.
	Throughout our proceedings, there has been a lack of transparency. I wonder whether, in some cases, it was deliberate to hide unpalatable proposals. However, in others, it was probably inadvertent and a result of the complexity of the proposals. Again, the Bill would have benefited significantly from open consultation before going into Committee. That option is available to other programmed Bills, and I hope that Treasury Ministers will take that up with the Leader of the House.
	I hope that the Treasury will pay serious attention to that proposal because it has the support of several bodies and representative groups, including the Low Incomes Tax Reform Group, the Institute of Directors, the British Chambers of Commerce, the Society of Trust and Estate Practitioners, the Association of Taxation Technicians and the Chartered Institute of Taxation. They all believe that there is an opportunity for genuine consultative sessions that would benefit the measure, resulting in more workable proposals. There is an opportunity to raise issues on which there has not been adequate consultation and explain more complex issues, especially given that we have a system whereby third-party relaying of information occurs. Such consultation is not intended to duplicate matters on which widespread pre-legislative scrutiny has already occurred.
	I hope that Treasury Ministers will take the proposal on board and take it up with the Leader of the House. I hope that they will be constructive about the matter, because they have been so about other matters and we have held genuinely useful debates.  [Interruption.] For example, we have received responses to our concerns about the word "think"— [Interruption.]

Question accordingly agreed to.
	 Bill accordingly read the Third time, and passed.

Stephen Ladyman: I beg to move,
	That, for the purposes of any Act resulting from the Off-Road Vehicles (Registration) Bill, it is expedient to authorise the payment out of money provided by Parliament of—
	(1) any expenses of the Secretary of State in consequence of the Act, and
	(2) any increase attributable to the Act in the sums payable under any other Act out of money so provided.
	I do so because it was the will of the House, expressed on Second Reading, that the Off-Road Vehicles (Registration) Bill should be discussed in Committee. The Bill, introduced by my hon. Friend the Member for Manchester, Blackley (Graham Stringer), will have expenditure implications for the public purse. Therefore, approval for a money resolution is needed before the Committee can engage in those discussions.
	In giving the Bill a Second Reading the House chose to ignore my serious reservations and advice. Let me make it clear that the Government opposed the Bill on Second Reading, and we oppose it now. We are behind no one in our determination to tackle antisocial behaviour and the nuisance caused by some mini-moto riders, but this Bill is not the way to do it. It is potentially expensive, and would impact more on legitimate users of off-road bikes than it would on those who are causing a nuisance.

Stephen Ladyman: No, I shall not give way again.
	We can, however, be certain of two things: first, that the total cost of implementing and enforcing the Bill will be substantial; and, secondly, that the police could achieve similar benefits using the existing law at far lower cost—a fact that several forces have already demonstrated around the country.
	The problems associated with mini-motos are often serious, and the Government share the desire of my hon. Friend the Member for Manchester, Blackley to tackle them. We have already done a great deal and I have even promised a further review of existing legislation to see whether we can do more, but I simply do not believe that the Bill is the way forward. However, if discussing it in Committee will help us to establish its failings and identify more practical actions that meet hon. Members' genuine concerns, then so be it. On that basis and on no other, I commend the resolution to the House.

Owen Paterson: Thank you, Madam Deputy Speaker. My next words were to be "the money resolution". It is amazing how long the Minister has managed to stall this since 2 March and we should congratulate him on that.
	Here we are, with the money resolution before us and astonishingly significant levels of public expenditure being implied. The Minister, in a written answer last week, gave his estimate of the cost as £80 million, with 230 additional staff at the Department for Transport, and that is without including advertising or additional equipment. The Bill would bring into the registration scheme 3 million additional vehicles and 500,000 new vehicles per annum. That is hugely disproportionate to the problem that we are addressing, when we already have 12 existing pieces of legislation.
	The measures would be a colossal burden on a Government agency that is struggling. Last year, 2,193,000 owners failed to pay vehicle excise duty. That raised the revenue forgone from £129 million the year before to £217 million. We know that 1 million speeding fines were not paid last year, because the owners could not be traced. Pertinent to this Bill is the fact that the number of unlicensed motorcycles leapt 152 per cent., from 275,000 to 694,000. As the money resolution would also authorise the payment of
	"any increase attributable to the Act in the sums payable under any other Act",
	there are clear and major implications for expenditure above the £80 million that the Minister has already mentioned.
	In a written answer last week, the Minister told my hon. Friend the Member for South-West Bedfordshire (Andrew Selous) that 2.5 per cent. of the vehicles on the DVLA database cannot be traced. Out of 33 million vehicles, that is 825,000. We have a major problem with uninsured vehicles—there are 1.1 million on our roads. In another written answer last week, the Minister said that no formal assessment has yet been made of the impact of delayed and postponed programmes in the agencies within his remit, but he did say that the Bill would be likely to have an adverse impact on other DVLA IT programmes and hence on the quality of service to the public. Alarmingly, he said that it is likely that one of the projects that would be rescheduled would be the delivery of continuous insurance enforcement. The cost today of enforcement for uninsured drivers is £30 per legitimate policy, so the Bill would entail a huge new hidden cost under paragraph (2) of the money resolution.
	The Minister has received representations from rural interests, farming organisations, motorcycle racing and motorcycle sports organisations, all expressing reservations about the Bill and all concerned about the extra costs implied by the money resolution. He has not had any discussions with the Secretary of State for Northern Ireland, the Secretary of State for Scotland or the First Ministers in Scotland and Northern Ireland. One assumes that there are significant cost implications in those areas.
	All that cost and huge effort could be for a craze that may be on the way out. The Motor Cycle Industry Association says that in 2005 144,905 units of motorcycles with engines of less than 50cc were imported from China. In February this year, we imported 672 units. On an annual basis, that is a drop of 94 per cent.
	The Bill is going nowhere—

Madam Deputy Speaker: The right hon. Gentleman is an experienced Member of the House, and well aware of the debate's limitations.

Jeff Ennis: I am grateful for the opportunity to raise an extremely important issue, even in the wee small hours. The Minister for Pensions Reform will know that I recently tabled early-day motion 1463 on the 25p age addition for pensioners over 80, which reads:
	"That this House believes that the 25 pence age addition for pensioners over 80 years old which was introduced at this level in 1971 should now be significantly raised; and further believes that, alternatively, the Government should give consideration to increasing the over 80 year olds' winter fuel allowance by £25 per annum or more as compensation for abolishing the 25 pence age addition."
	I am pleased that the early-day motion has attracted 64 signatures from Members on both sides of the House. The Minister will also know that I recently raised the matter with my right hon. Friend the Prime Minister at Prime Minister's questions.
	I must admit that I have been concerned for some time about the fact that the 25p age addition has remained static since 1971, but matters were brought to a head on 4 April this year, when I attended the 80th birthday party of my father, Bill Ennis, in his back garden. It was a sunny day, unlike the weather that we have recently had in south Yorkshire. Without my prompting, my dad said to me: "Jeff, do you know what the Government have given me for my 80th birthday?" I knew the answer, but I thought I would go along with him and said, "No, what have they given you, Dad?" He said, "25p a week on my state pension. Isn't that ridiculous?" That epitomises the reason why I called for this Adjournment debate. If that is my dad's reaction to the 25p increase on his state pension, I am sure that most other 80-year-old pensioners will have a similar reaction.
	When the 25p addition was introduced, it meant something. In those days, it was officially known as a crown, but we mostly called it five shillings and it was commonly known as five bob—that is the phraseology I recall. I am sure that the Minister's recollections of 1971 are hazy compared with mine, because that was the year in which I started college in Bristol. I remember that at the student bar in Bristol in 1971, I could buy a pint of lager for 15p. Being a Yorkshireman, I remember that it was 15p, because I could buy a pint of lager in Brierley in my constituency for 12p, so there was a 3p differential, which was quite a substantial amount of money at the time. In 1971, for 25p, I could buy a pound of Cheddar cheese, but I would now have to pay £2.60. I could buy a dozen large eggs for 25p, but they now cost over £2. I could buy a pound of bacon for 24p, but it now costs over £3. I could buy four white loaves for 23p. That would now cost £3.44. Taking into account inflation, 25p in 1971 is worth £2.50 at today's prices. There is quite a difference in the value of 25p in 1971 and in 2007.
	I shall briefly examine the history of the 25p age addition and why it has never been increased. It was introduced in September 1971 through the national insurance Bill 1971 by the Tory Government of the day. Sir Keith Joseph explained that it was intended to recognise
	"albeit in a small way . . . the special claims of very elderly people who on the whole need help rather more than others . . . As they grow old their possessions wear out and they need help for necessary jobs which they used to do themselves".
	Sir Keith Joseph explained that as a result of the introduction of the age addition, a single person over 80 on the standard rate pension would get £6.25 a week.
	In 1978 the Labour Government floated the idea of raising the age addition in their discussion document, "A Happier Old Age", which stated:
	"The older generation of pensioners, most of whom are women, tend to be poorer and their savings have been eroded by inflation and time. For the over 80s an age addition to pensions of 25p a week was introduced in 1971. For many years ahead the very old will in general be unlikely to have substantial earnings-related pensions. In so far as resources permit, is there a case for a higher pension rate at a fixed age without regard to individual need, or would it be preferable to provide more services for the very old?"
	That sounds rather familiar.
	In 1995 Lord Mackay of Ardbrecknish, a Conservative Minister in the Department of Social Security, said:
	"My Lords, we have no plans to up-rate the 25 pence age addition which is paid to all pensioners from the age of 80. We believe that help should be targeted at pensioners on low incomes, and we have concentrated resources on the higher pensioner premium in income support for those aged 80 or over."—[ Official Report, House of Lords, 27 April 1995; Vol. 563, c. 1021.]
	In 2003, the present Minister for Trade, my right hon. Friend the Member for Makerfield (Mr. McCartney), who was the Minister for Pensions at the time, said:
	"The 25 pence age addition for state pensioners aged 80 and over was introduced by the Conservative Government in 1971.
	The age addition will be maintained, but on its own it is not the most cost-effective way to help elderly pensioners. We have gone much further.
	We have introduced measures which, from October 2003, will mean that the poorest third of pensioner households will have gained over £1,500 a year in real terms.
	We have introduced free TV licences from age 75 worth over £100 a year, winter fuel payments of £200 per year for eligible households paid to some 11 million people in 8 million households, and the minimum income guarantee which means that no single pensioner has to live on less than £102.10 and no couple on less than £155.80 from April.
	We are going further still with the introduction of pension credit from October 2003.
	We have therefore found better and more effective ways to help pensioners with the lowest incomes."—[ Official Report, 25 March 2003; Vol. 402, c. 167W.]
	There is no doubt that the Labour Government have done more than any previous Government to improve pensioner incomes. I am proud to be associated with what the Government have achieved. The Minister might think that I am having a bit of a whinge, but many OAPs resent the fact that the issue leaves a nasty taste in their mouths. We need to consider how best to deal with that. I understand the Government's reluctance to consider raising the 25p age addition in its present form because of all the other initiatives that we have brought in. My view, as I suggest in the early-day motion, is that we should scrap the 25p age addition and, by way of compensation, raise the winter fuel allowance for the over-80s by a minimum of £25 a year.That policy change would find favour with pensioners, who undoubtedly like the winter fuel allowance.
	The current winter fuel allowance standard rate of £200 for a household containing at least one person aged 60 or over was first paid in the winter of 2000-01. Households including a person aged 80 or over have received an additional £100 since the winter of 2003-04. Announcing the introduction of that higher rate for people aged 80 and over, the Chancellor said:
	"At the age of 80, pensioners receive an addition of just 25p a week to cover the costs that getting older involves. At just 25p extra per week, it has rightly been criticised as inadequate, and I have had many representations from MPs on all sides of the House. To double or quadruple such a small allowance would not be a sufficient recognition of the needs of the very elderly over 80, or of the contribution that they have made to the life of our country and its success. The winter fuel payment of £200 has not, I regret, been supported by all parties in this House. But I hope that there will now be all-party support for my proposal that for every household where a pensioner reaches the age of 80, or is over 80, we will add to the winter allowance of £200 an extra payment of £100—a total of £300 that will be paid each and every year to almost 2 million elderly men and women over 80."—[ Official Report, 9 April 2003; Vol. 403, c. 287.]
	In the 2005 pre-Budget report, the Chancellor announced that winter fuel payments would continue to be paid at those rates for the duration of the current Parliament. Around 2 million households benefited from the 80-plus payment in the winter of 2003-2004 at a total cost of more than £208 million. The reply to a question that I recently tabled showed that the estimated annual cost of raising the winter fuel payment by £25 for people aged 80 or over in 2007-08 was around £50 million. For the winter of 2007-08, the total expenditure on winter fuel payments is forecast to be £2,059 million. That switch would be very popular, because it would automatically benefit every pensioner aged over 80.
	The 25p weekly age addition is subject to income tax. Some 830,000 older pensioners currently pay income tax, which is roughly one third of older pensioners—we currently have just more than 2.5 million pensioners aged over 80. After their income tax has been deducted, 830,000 older pensioners only get 20p a week allowance after tax. By switching to an annual increase of 25p or more on the winter fuel allowance, every older pensioner would get the full £25. A two-pensioner household containing two pensioners aged over 80 currently gets 50p a week—25p each—and £25 a year roughly equates to 50p a week for a double household.
	As I have mentioned, the cost to the Exchequer of increasing the winter fuel allowance by £25 has been estimated at £50 million. In my opinion, that would be £50 million well spent. That sum would, of course, be reduced by the current cost of paying out the 25p age addition. Perhaps the Minister will inform the House of that cost, because I have not found that information—the total cost would be £50 million minus that particular sum of money.
	I repeat that I hope that the Minister does not think that I am having a go at the Government. I am proud of what we have achieved so far for pensioners. The announcement earlier this year about once again tying pension increases into average earnings from 2012 is yet further evidence of this Government's commitment to the nation's pensioners. However, my philosophy on this matter is this: why spoil the barrel for a hap'orth of tar? That is exactly how pensioners regard the 25p age addition. After all, these days 25p cannot even buy a second class stamp. I should like the Minister and his Department, and indeed the Treasury, to give very serious consideration to this important matter.

Jeff Ennis: My hon. Friend has been kind to me at this late hour and I am pleased about that. He obviously realises that my main point is not about increasing the age addition allowance but switching it so that the income tax element falls away. I know that I am meeting some resistance. I met the same the resistance from Ministers about raising the age for smoking from 16 to 18, but it crumbled after two years of trying. Will my hon. Friend facilitate a meeting between him, me and a Treasury Minister to discuss the matter further?